Datasets:

hammadali1805

/

legal_summary

like 0

Appeal No. 188 of 1961. Appeal by special leave from the judgment and order dated September 11,1959, of the Industrial Tribunal, Punjab, Patiala in Reference No. 30 of 1957. G.S. Pathak, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants. Bawa Shivcharan Singh and Janardan Slwrma for the respondents. February 8. The Judgment of the Court was delivered by VENKITARAMA AIYAR, J. This is an appeal by special leave against the Order of the Industrial Tribunal, Punjab, dated September 11, 1959, in Reference No. 30 of 1957, overruling certain preliminary objections raised by the appellant to the 91 jurisdiction of the Tribunal to hear the reference. The facts are that on February 14,,1955, the Government of Punjab referred under section 10(1)(c) of the , hereinafter referred to as "the Act", certain disputes between the appellant and the respondents to the Industrial Tribunal Punjab, Jullundur, for adjudication. ' That was numbered as Reference No. 3 of 1955. This Tribunal had been constituted on August 29, 1953, by a Notification issued by the Government of Punjab, which is as follows "In exercise of the powers conferred under section 7 of the (Act XIV of 1947), the Governor of Punjab, in consultation with the Punjab High Court, is pleased to appoint Shri Avtar Narain Gujral 'Advocate, as Industrial Tribunal 'for Punjab. " The main contention pressed before us on %behalf of the appellant is that Shri A.N. Gujral was 'not qualified under section 7(3)(c) of the Act under which the Notification was issued to be appointed as Tribunal on August 29, 1953, as he was very sixty years of age on that date, having been born on June 4, 1 892, and that there was therefore no Tribunal validly constituted in existence, and that in consequence the reference, to that so called Tribunal on February 14, 55, was wholly inoperative. While Reference No. 3 of 1955 was pending before the Tribunal, the provisions of the , were amended by the Industrial Dispute (Amendment and Miscellaneous Provisions) Act, 1956 (Act No. 36 of 1956), which came into force on March 10, 1957. This Amendment Act repealed section 7 of the principal Act, and replace it by sections 7A, 7B and 7C. Section 30 of the Amendment Act contains a saving as regards proceedings in relation to any industrial dispute which had been pending before a Tribunal constituted under the principal Act. Acting under this section, the 92 Punjab Government issued on April 19, 1957, the following Notification : "No. 4194 0. Lab 57/652 RA In continuation of Punjab Government Memorandum No. 3078 C Lab 57/4224, dated the 1st/llth March, 1957, and in exercise of the powers conferred by section 7 of the , as in force before the commencement of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956, read with Section 30 of the latter Act and all other powers enabling him in this behalf the Governor of Punjab is pleased to extend (a)the period for which the Industrial Tribunal, Punjab, Jullundur, is constituted, and (b)the term of appointment of the Role Member thereof. up to the last day of October, 1957, or such date as the proceedings in relation to industrial disputes pending in the said Tribunal immediately before the 10th March, 1957, are disposed of, whichever is earlier." To put it briefly, this Notification extended the life of the Tribunal constituted under the repealed section 7, for the period specified therein, and it also continued the term of Shri A,N. Gujral, as a Member thereof, for the said period. The contention of the appellant with reference to this Notification is that section 30 of Act 36 of 1956 does not authorise the appointment of a Member to the Tribunal constituted under section 7, and that the Notification in so far as it continued Sbri A.N. Gujral. as a Member of the Tribunal after his term of office had expired on Mach 10, 1957, was unauthorised and void. 93 On the same date on which the above Notification was issued, that is on April 19, 1957, the Government of Punjab issued a Notification under section 7A of the Act of which the relevant portion is as follows : "No. 4194 C Lab 57/66t RA In exercise of the powers conferred by Section 7A of the Industrial Disputes Act, 1917, as inserted by section 4 of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act , 1956, (No. 36 of 1956), and all other powers enabling him in this behalf, the Governor of Punjab is pleased to constitute an Industrial Tribunal with Headquarters at Jullundur and to appoint Shri Avtar Narain Gujral, B.A., LL.B., as its Presiding Officer with effect from the date of the publication of this notification in the Official Gazette up to 3rd June, 1957. " It will be noticed that this Notification firstly constituted a now Tribunal being the Industrial Tribunal, Jullundur, and secondly it appointed Shri A. N. Gujral as its Presiding Officer 'up to June 3, 1957. The significance of that date is that, under section 7C (b) enacted by the Amendment Act, 1956, the age of retirement for members was fixed at sixty five, and under that provision, Shri A.N. Gujral would have to retire on June 3, 1957. The Punjab Legislature intervened at this stage and enacted two statutes which are material for the present dispute. One of them was the Industrial Disputes (Punjab Amendment) Act 8 of. Section 3 of this Act amended section 7C (b) of the principal Act by substituting for the words "he has attained the age of sixty five years", the words "he has attained the the age of sixty seven years". Thus the age of retirement was raised to sixty seven years. By the operation of this Act, the tenure of Shri A. N. Gujral could be extended from 94 June 3, 1957 to June 3, 1959, and that in fact was done by a number of Notifications issued from time to time. The appellant contends that this legislation was intended to benefit a single individual Shri A.N. Gujral, and is therefore void as offending article 14 of the Constitution. The result, according to the appellant, is that after June 3, 1957, there was no one validly holding the office of Member of the Industrial Tribunal. The second statute enacted by the Punjab Government is the Industrial Disputes (Amendment and Miscellaneous Provisions) (Punjab Amendment) Act 9 of 1957. It introduced in section 30 of the Amendment Act, 1956, a new sub section (2) conferring on the ,State Government authority to re constitute Tribunal established under the , where those Tribunals had come to an end and there were matters pending before them for adjudication. Going back to the Tribunal which was constituted under the repealed section 7 of the Act it will be remembered that a Notification had been issued on April 19, 1957, under section 30 of the Amendment Act, 1956, keeping it alive until the pending matters were dis posed of or until October 31, 1957, whichever was earlier. The expectation that the proceedings before that Tribunal would be completed by that date was however, not realised and therefore acting under section, 33B (1) of the Act, and section 30 of the Amendment Act 1956, as further amended by Punjab Act, 9 of 1957. the Government of Punjab issued on October 31, 1957 a Notification transferring the matters pending before the old Tribunal constituted under section 7 to the new Tribunal constituted on April 19, 1957, under section 7A. In accordance with this Notification, Reference No. 3 of 1955 was transferred to the new Tribunal and was renumbered as 30 of 1957. The contentions urged by the appellant against this order of transfer are, firstly, that the Tribunal to which the transfer had been made was not, for the reasons already given, validly constituted and had no legal existence, and, 95 secondly, that the new provision introduced by the Punjab Act 9 of 1957 has no retrospective operation and that, in consequence, the proceedings which had been pending before the old Tribunal on March 10, 1957, could not be transferred to the new Tribunal under this section. The present reference 30 of 1957 was pending till June 3, 1959, when Sbri A.N. Gujral retired. The Punjab Government then issued a Notification appointing Sri Kesho Ram Passey, retired Judge of the Punjab High Court as the Presiding Officer of the Industrial Tribunal, Jullundur. Before him, the present appellant filed an application on September 4, 1959, raising a number of preliminary objections to the hearing of the reference. By its Order dated September 11, 1959, the Tribunal overruled these objections and posted the. matter for hearing on the merits. It is the correctness of this Order that is DOW challenged before us in this Appeal. Though a number of objections were raised to the bearing of the rieference be,.fore the Tribunal, the contentions advanced before us for the appellant are the following : (1) Shri A. N. Gujral was riot qualified to be appointedto the Tribunal under section 7(3)(c) of the Act that, in consequence, the reference to him dated February 14, 1955, was incompetent; (2)that the Notification. of the Punjab Government dated April 19, 1957 appointing Shri A. N. Gujral as a Member of the Industrial Tribunal, Juilundur, and the subsequent Notifications extending bis tenures of office are unauthorised and inoperative; (3)that the Notification of the Punjab Government dated Ootober 31, 1957, transferring the proccedings. pending before the old Tribunal to the new Tribunal was inoperative, because (i) the Punjab Act 8 of 1957 is void being repugnant to article 14 of the, Constitution and the appointment of Shri A. N. Gujral as Member under that Act is also void; 96 and (ii) section 30(2) enacted by Punjab Act 9 of 1957 under which the transfer was made, did not authorise transfer of proceedings, which had been pending on or before March 10, 1957. (1) Taking up first the, contention that Shri A. N. Gujral was not qualified to be appointed to the Tribunal on August 29, 1953, by reason of the fact that he was over sixty years of age, the question is one of interpretation of the language of section 7(3)(c) of the Act. Section 7, in so far As it is material for the present purpose, is as follows: "7. Industrial Tribunals. (1) The appropriate Government may constitute, one or more Industrial Tribunals for the, adjudication o f industrial disputes in accordance with the provisions of this Act. (2)A Tribunal shall consist of such number of independent members as the appropriate Government may think fit to appoint,, and where the Tribunal consists of two or more members, one of them shall be appointed as the Chairman thereof. (3)Where a Tribunal consists of one member only, that member, and where it consists of two or more members, the Chairman of the Tribunal, shall be a person who (a)is or has been a Judge of a High Court; or (b) is or has been a District Judge or (c) is qualified for appointment as a Judge of a High Court: Provided that no appointment under this subsection to a Tribunal shall be made of any person Dot qualified under clause (a) or (b) except with the approval of the High Court of 97 the State in which the Tribunal has, or is intended to have its usual seat." Shri A. N. Gujral was appointed under section 7(3)(c) being an Advocate. The question is, whether he was then qualified for appointment as a Judge of a High Court under that clause. The Constitutional provision hearing on this point is article 217, which in so far as it is material is as follows : "217. (1) Every Judge of a High Court shall be appointed by the President by warrant under his hand and seal after consultation with the Chief Justice of India, the Governor of the State, and, in the case of appointment of a Judge other than the Chief Justice, the Chief Justice of the High Court, and shall hold office in the case of an additional or acting Judge, as provided in article 224, and in any other case until he attains the age of sixty years; Provided that. . . (2)A person shall not be qualified for appointment as a Judge of a High Court unless he is citizen of India and (a) has for at least ten years held an Judicialoffice in the territory of India, or (b) has for at least ten years been a advocate of a High Court or of two or more such Courts in succession. Explanation. . While article 217 (2) prescribes the qualifications for appointment as a Judge, article 217(1) lays down that the Judge shall hold office until he attains the age of sixty years. The whole of the controversy before us is as to the inter relation between these two clauses. The contention of Mr. Pathak, learned counsel for the appellant, is that though article 217 (1) refers, in terms, to the termination of the office of Judge, in substance, it lays down a 98 qualification for appointment, because the appointment of a person over sixty as a Judge would clearly be repugnant to article 217(1) even though he might satisfy all the requirements of article 217(2). It is accordingly argued that it is an implied qualification for appointment as a Judge under article 217 that the person should not have attained the age of sixty at the time of the appointment. We agree that there is implicit in article 217(1) a prohibition against appointment as a Judge of a person who has attained the age of sixty years. But in our view, that is in the nature of a condition governing the appointment to the office not a qualification with reference to a person who is to be appointed thereto. There is manifest on the terms and on the scheme of the article a clear distinction between requirements as to the age of a person who could be appointed as a Judge and his fitness based on experience and ability to fill the office. article 217(1) deals with the former, and, in form, it has reference to the termination of the office and can therefore be properly read only as imposing, by implication a restriction on making the appointment. In strong contrast to this is article 217(2) which expressly refers to the qualifications of the person to be appointed such as his having held a judicial post or having been an Advocate for a period of not less than ten years. We think that on a true construction of the article the prescription as to age is a condition attached to the duration of the office and not a qualification for appointment to it. Mr. Pathak also relied on articles 224 and 376 as lending support to his contention that age is to be regarded as an implied qualification under article 217. article 224 relates to the appointment of additional and acting Judges and it is provided in els. (1) and (2) that the person to be appointed as additional or acting Judge by the President should be a duly qualified person. There is nothing about the age of the person to be appointed in these clauses. 99 That is provided in article 224(3) when enacts that no person appointed as an additional or acting Judge of a High Court shall hold office after attaining the age of sixty years. " This article is also framed on the same lines as article 217 and does not carry the matter further. Nor is there anything in article 376 which throws any further light on this point. It has reference to persons who were Judges in the High Courts of the States specified in part of the First Schedule at the time when the Constitution came into force, and provides that they shall become Judges of the High Courts in those States under the Constitution, and then enacts a special provision that they "shall notwithstanding anything in clauses (1) and (2) of article 217 but subject to the proviso to clause (1) of, that article, continue to hold office until the expiration of such period as the President may by order determine. " We see nothing in the terms of this article which lends any support to the contention that age is to be regarded as a qualification. More to the point under consideration is article 165 (1) that the ",Governor of each State shall appoint a person who is qualified to be appointed as a Judge of a High Court to be Advocate General for the State. " The question has been discussed whether on the terms of this article" a person who has attained the age of sixty could be appointed as an Advocate General. If the age of a person is to be regarded as one of his qualifications, then he could not be. The point arose for decision in G. D. Karkare vs T. L. Shevde (1), where a Judge who had retired at the age of sixty had been appointed as Advocate General. The validity of the appointment was challenged on the ground that he was disqualified by reason of his age. The learned Judges of the Nagpur High Court held that cl. (1) of article 217 of the Constitution prescribed only the duration of the appointment of a Judge of the High Court and could not be construed (1) I. L.R. [1952] Nas. 409. 100 as prescribing a qualification for his appointment. It is argued for the appellant that the appointment of an Advocate General under article 165 might stand on a different footing from that of a Judge under article 217. because of the special provision in article 165(3) that the Advocate General is to hold office, at pleasure, whereas a Judge holds office during good behavior. But this difference bears only on the power of the appropriate authority to terminate the appointment and not on the qualification of the person to be appointed to the office. In our view, the interpretation put upon article 217 in G. D. Karkare 's case (1) is correct. Though the true meaning of article 217 has figured largely in the argument before us, it is to be noted that we are primarily concerned in this appeal with the interpretation of section 7(3)(c) of the Act, and that must ultimately turn on its own context. Section 7(3)(a) provides for the appoint ment of a High Court Judge, sitting or retired, as a Member of the Tribunal. Age is clearly not a qualification under this sub clause, as the age for retirement for a Judge of the High Court is sixty. Likewise, el. (b) provides for the appointment of a District Judge, setting or retired, as a Member. A retired District Judge who is aged over sixty will be eligible for appointment under this subclause. Thus the age of a person does not enter into his qualifications under sub cls. (a) and (b). It would therefore be legitimate to construe sub el. (c) as not importing any qualification on the ground of age. But it is said that sub cls. (a) and (b) form a distinct group having reference to judicial officers, whereas, cl. (c) is confined to Advocates, who form a distinct category by themselves, and that in view of this difference, considerations as to age applicable to cl. (a) and (b) need not be applicable to el. There is undoubtedly a distinction (1) I. L. R.[1952] Nag. 409. 101 between cls. (a) and (b) on the one hand and c1. (c) on the other. But the question is whether this has any reasonable relation to the difference which is sought to be made between the two classes with reference to the age of appointment. If a retired Judge of the age of sixty can fittingly fill the office of a Member of the Tribunal under section 7, an Advocate of that age can likewise do so. In our view, there is no ground for importing in section 7(3)(c) an implied qualification as to age, which is not applicable to el. 7(3)(a) and (b). This question was considered by a Bench of the Punjab High Court in Prabhudayal vs State of Punjab (1). There the validity of the appointment of Shri A. N. Gujral under the notification dated August 29, 1953, which is the very point now under debate, was challenged on the ground that as he was over sixty on that date, he was not qualified to be appointed under section 1 (3)(c). The Court held approving of the decision in G. D. Karkare 's case (2), that the prescription as to age in article 217 (1) was not a qualification to the office of a Judge under article 217(2), and that a person who was more than sixty was qualified for appointment under section 7(3)(c). Reliance is placed for the appellant on the terms of section 7C which was substituted by the Amendment Act 36 of 1956 in the place of section 7 as supporting the contention that age is a qualification for appointment under section 7(3) (c). Section 7C is as follows : "No person shall be appointed to, or continue in, the office of the presiding officer of a Labour Court, Tribunal or National Tribunal, if (a) he is not an independent pet son or (1) A. 1. R (2) 1.1 R.[1952] Nag. 409. 102 (b) he has attained the age of sixty five years ' " The marginal note to that section which was also relied on is as follows : " Disqualifications for the presiding officers of Labour Courts, Tribunals and National Tribunals. " The argument of the appellant is that, in prescribing the age as a qualification under section 7C, the Legislature only made explicit what was implicit in a. 7(3)(c), and that therefore the qualification on the basis of age should also be imported in section 7(3)(c). This inference does not, in our opinion, follow. The insertion of age qualification in section 7C is more consistent with an intention on the part of the Legislature to add, in the light of the working of the repealed section 7, a new provision prescribing the age of retirement for Members. We agree with the decision of the Punjab High Court in Prabhudayals case (1) and hold that section 7 (3) (c) does not import any qualification based on the age of the person to be appointed, and that the appointment of Shri A. N. Gujral on August 29, 1953, was valid under a. 7(3)(c). (2)The next contention advanced for the appellant is that the Notification dated April 19, 1957, appointing Shri A. N. Gujral as a Member of the Tribunal issued under section 30 of the Amendment Act 36 of 1956 was not authorised by the terms of that section and that therefore there was no validly constituted Tribunal from that date. Section 30 is as follows : "Savings as to proceedings pending before Tribunals : If immediately before the commencement of this Act there is pending any proceeding in relation to an Industrial dispute before a Tribunal constituted (1) A. I. R. [1959] Punj 460. 103 under the (14 of 1947), as in force before such commencement, the dispute may be adjudicated and the proceeding disposed of by that Tribunal after such commencement, as if this Act had not been passed. " The contention urged before us is that section 7 under ,Which Shri A. N. Gujral had been constituted Tribunal was repealed on March 10, 1957, the notification dated April 19, 1957, appointing him as a Member of the Tribunal is void. There is no substance in this contention. Section 30 expressly provides for the life of the Tribunal being extended for the period specified therein, and that necessarily implies a power to continue Shri A. N. Gujral as the Tribunal, and we should add that in view of our decision on point No. 3 this objection is practically of no importance. (3)Lastly, it is contended that the transfer of the proceedings pending before the old Tribunal to the new Tribunal under the Notification dated October 31, 1957, was invalid and inoperative. Two grounds were urged in support of this contention. One is that Shri A.N. Gujral attained the age of sixty five on June 4, 1957, and his term of office would have then expired under s.7C. Then the Punjab Legislature enacted Act 8 of 1957 raising the age of retirement under s.70(b) from sixty five to sixty seven. That was with a, view to continue Shri A.N. Gujral in office. And this legislation came into force only on June 3, 1957. This Act, it is said offends article 14 as its object was to benefit a particular individual, Shri A.N. Gujral, and reference was made to a decision of this Court in Ameeroonissa vs Mehboob (1) as supporting this contention. There is no force in this contention. There the legislation related to the estate of one (1) ; 104 Nawab Waliuddoula, and it provided that the claims of Mahboob Begum and Kadiran Begum, who claimed as heirs stood dismissed thereby and could not be called in question in any court of law. And this Court held that it was repugnant to article 14, as it singled out individuals and denied them the right which other citizens have of resort to a court of law. But the impugned Act, 8 of 1957 is of general application, the age being raised to sixty seven with reference to all persons holding the office under that section. The occasion which inspired the enactment of the statute might be the impending retirement of Shri A. N. Gujral. But that is not a ground for holding that it is discriminatory and contravenes article 14, when it is, on its terms, of general application. The second ground of attack against the order of transfer is that it is not competent under s.30(2) of the Amendment Act 36 of 1956 as further amended by the Punjab Act 9 of 1957. Section 30(2) is as follows : "If immediately before the commencement of this Act there was pending any proceeding in relation to an industrial dispute before a Tribunal constituted under the , as in force before such commencement and such proceeding could riot be disposed of by that Tribunal due to the Tribunal having come to an end on the expiry of the period for which it was constituted, the State Government may reconstitute that Tribunal for adjudicating that dispute and disposing of that proceeding after such commencement as if this Act had not bee n passed, and the proceeding may be continued by that Tribunal from the, stage at which it was left. " 105 The contention urged before us is that this provision has no retrospective operation and that in consequence the proceedings which had been pending before the old Tribunal on March 10, 1957, could not be transferred to the new Tribunal under this section. This contention is clearly untenable, because the whole object of s.30(2) is to provide for the hearing of disputes which were pending before the old Tribunal, and its operation is entirely retrospective. This contention must there. fore be rejected. In the result, the repeal fails and is dismissed with costs. Appeal dismissed.

On February 14, 1953, the Government of Punjab referred certain disputes between the appellant company and its workmen to the Industrial Tribunal which had been consti tuted on August 29, 1953, by a notification issued under section 7 of the industrial Disputes Act, 1947, by which G, an Advo cate, was appointed as the Industrial Tribunal for Punjab. When the reference was pending the Act was amended. The Amendment Act inter alia repealed section 7 of the principal Act and replaced it by sections 7A, 7B and 7C, and by section 30 provided for a saving clause in respect of the proceedings pending before the Tribunal constituted under the principal Act. On April 19, 1957, the Punjab Government issued a notification under section 7 of the Act and section 30 of the Amendment Act extending the life of the Tribunal constituted under the repealed section 7 and also extending the term of G as the member. On the same date another Notification was issued under section 7A of the Act constituting a new Tribunal and appointing G as the Presiding Officer up to June 3, 1957. Under section 70 (b) the age of retirement for members was fixed at sixty five and under that provision G would have to retire by June 3, 1957. The Punjab Government intervened and passed the Industrial Disputes (Punjab Amendment) Act, 1957, raising the age of retirement of members to sixty seven years. After G had retired on June 3, 1959, the Punjab Government issued a notification appointing another person as the Presiding Officer of the Industrial Tribunal. The appellant challenged the legality of the reference on the grounds, inter alia, (1) that G was not qualified to be appointed to the Tribunal under section 7 (3) (c) of the Act, as he was over sixty years and, therefore, the reference to him dated 90 February 14, 1955, was incompetent, and (2) that the Indus trial Disputes (Punjab Amendment) Act, 1937, was passed with a view to benefit a single individual, G, and, therefore, was void as offending article 14 of the Constitution of India. Held, (1) section 7(3)(c) of the , did not import any qualification based on the age of the person to be appointed, and that the appointment of G on August 29, 1953, was valid under that section. On the true Construction of article 217 of the Constitution of India, the prescription of age therein is a condition attached to the duration of the office and not a "qualifica tion" for appointment to it. G.D. Karkare vs T.L. Shevde, I.L.R. and Prabhudayal vs State of Punjab, A. I. R. 1959 Punj. 460, approved. (2) the Industrial Disputes (Punjab Amendment) Act,1957,not contravene article 14 of the Constitution, because thoughthe occasion which inspired the enactment of the statutemight be to benefit an individual, it was of general application and could not therefore be held to be discriminatory. Ameerunissa vs Mehboob; , , distinguished.

s Nos. 114 and 115 of 1961. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. 832 M. K. Nambiar, M. K. Govind Bhatt, section N. Andley, and Rameshwar Nath, for the petitioners. M. C. Setalvad, Attorney General of India, K. K. Mathew, Advocate General for the State of Kerala, Sardar Bahadur, George Pudissary and V. A. Seyid Muhammad, for the respondents. December 5. The Judgment of Gajendra gadkar, Wanchoo and Das Gupta, JJ., was deliverd by Wanchoo, J. Sarkar, J. and Ayyangar, J. delivered separate Judgment. WANCHOO, J. These two writ petitions which were heard along with Purushothaman Nambudiri vs The State of Kerala (1) raise the constitutionality of the Kerala Agrarina Relations Act, No. IV of 1961 hereinafter referred to as the Act. The petitioners come from that part of the State of Kerala which was formerly in the South Canara district of the State of Madras and came to the State of kerala by the State Reorganisation Act of 1956. Their lands are situate in Hosdrug and kasargod Taluks which have now been made part of the Cannanore District in the State of Kerala. They hold large areas of lands, the major part of which is held by them as ryotwari parradars, of Madras under the Board 's Standing Orders of that State. In these lands they have areca and pepper plantations besides rubber plantation. They also grow other crops on some of the lands. The Act is being attacked on the ground that it contravenes articles 14, 19 and 31 of the Constitution. Besides this, it is also contended on behalf of the petitioners that the Bill which became the Act lapsed under the provisions of the Constitution, and therefore the assent given to the Bill by the President was of no effect and did not result in the Bill becoming an Act. We do not think it necessary to set out the details of the attack on this last score in the present petitions as the matter 833 has been considered in full in the judgment in the connected Writ Petition No. 105 of 1961. The petitioners further submit that their lands which they hold as ryotwari pattadars are not estates within the meaning of article 31A (2)(a) of the Constitution and therefore the Act so far as it affects them is not protected under article 31A, and it is open to them to assail it as violative of the rights conferred on them by articles 14, 19 and 31 of the Constitution. They have attacked the Act on a number of grounds as ultra vires the Constitution in view of the provisions of articles 14, 19 and 31. We do not however think it necessary to detail all the attacks on the constitutionality of the Act for present purposes. It is enough to say that the main attack on the constitutionality of the Act has been made on the following six grounds: (1) The Bill which became the Act had lapsed before it was assented to by the President and therefore the assent of the President to a lapsed bill was of no avail to turn it into law. (2) The Act is a piece of colourable legislation as it has made certain deductions from the compensation payable to landholders under Chap. II and to others who held excess land under Chap. III and this amounts to acquisition of money by the State which it is not competent to do under the power conferred on it in Lists II and III of the Seventh Schedule to the Constitution. (3) The properties of the petitioners who are ryotwari pattadars are not estates within the meaning of article 31A of the Constitution and therefore the Act is not protected under that Article so far as it applies to lands of ryotwari pattadars like the petitioners. (4) The Act exempts plantation of tea, coffee, rubber and cardamom from certain 834 provisions thereof, but no such exemption has been granted to plantations of areca and pepper, and this is clearly discriminatory and is violative of article 14. (5) The manner in which ceiling is fixed under the Act results in discrimination and is therefore violative of article 14. (6) The compensation which is payable under Chapters II and III of the Act has been reduced by progressive cuts as the amount of compensation increase and this amounts to discrimination between persons similarly situate and is therefore violative of article 14. The petitions have been opposed on behalf of the State and its contention is, firstly, that the Bill did not lapse and the President 's assent was rightly given to it rightly became law; secondly, that the petitioners ' estates lands are estates within the meaning of article 31A (2)(a) and the Act is therefore protected under that Article; thirdly, that the Act is not a piece of colourable legislation and the State Legislature was competent to enact the Act under item 18 of List II and item 42 of List III of the Seventh Schedule and there is no acquisition of money by the state under the Act and reference is made to section 80 of the Act in this connection; and lastly, that the discrimination alleged with respect to plantations, the fixation of ceiling and the deductions from compensation payable under Chapters II and III is really no discrimination at all and the provisions in that behalf are based on an intelligible differentia which is in accordance with the object and purpose of the Act. The question whether the Bill which finally received the assent of the President on January 21, 1961, had lapsed because the legislative assembly which originally passed it was dissolved and a new legislative assembly which came into being after 835 the general elections reconsidered and re passed it under article 201 of the Constitution has been considered by us in Writ Petition No. 105 of 1961, judgment in which has just been delivered and it has been held there that the bill did not lapse and therefore it validly became law when the President assented to it. The attack on the Act therefore on this grounds must fail. We now come to the attack made on the Act on the ground that it is a piece of colourable legislation beyond the legislative competence of the State legislature. What is colourable legislation is now well settled: see K. C. Gajapati Narayan Deo vs The State of Orissa (1), where it was held "that the question whether a law was a colourable legislation and as such void did not depend on the motive or bona fides of the legislature in passing the law but upon the competency of the legislature to pass that particular law, and what the courts have to determine in such cases is whether though the legislature has purported to act within the limits of its powers, it has in substance and reality transgressed those powers, the transgession being veiled by what appears, on proper examination, to be a mere pretence or disguise. The whole doctrine of colourable legislating is based upon the maxim that you cannot do indirectly what you cannot do directly. The Act has been passed under the legislative powers vested in the State legislature under item 18 of List II and item 42 of List III of the Seventh Schedule. Item 18 of List II deals inter alia with "land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents" Item 42 of list III deals with "acquisition and requisitioning of property. " The contention on behalf of the petitioners is that in the guise of legislating under these two entries the State legislature by the employment of certain 836 devices has taken away money, which should have gone to land owners or to those from whom excess lands were being acquired. The attack is based on the facts that in section 52 of the Act compensation payable to a land owner is reduced after the purchase price to be paid by the tenant to whom the land is to be assigned has been ascertained, and that in section 64 of the Act the compensation payable to a person from whome excess land is taken in reduced by certain percentage after the market value of the land has been determined. It is urged that by these devices the State is acquiring money which should properly have gone to the land owner to whome compensation is payable under section 52 and to the person who surrenders excess land to whome compensation is payable under section 64. There is no doubt that certain deductions are made from the purchase price payable by the tenant under section 45 and from the market value before compensation is arrived at for payment to the land owner under section 52 and to the person surrendering excess land under section 64. But if one looks at the purpose and object of the Act it will be clear that the main provisions of the Act are clearly within the legislative competence of the State legislature under item 18 of List II and item 42 of List III. The scheme of the Act so far as Chap. II dealing with extinction of the land owner 's right is concerned is that the land owner 's right vested in the State under sections 41 and 42 on a day to be notified by the Government in that behalf. Thereafter, section 43 provides that cultivating tenants of the lands which have vested in the State shall have a right to assignment of the right, title and interest so vested in the State on payment of a certain price which is calculated under section 45 and is called the purchase price. After the purchase price is determined, the compensation to be paid to the land owner is provided by section 52 and there is reduction in the purchase price for the purpose of given compensation. It is however obvious that the object of Chap. II is to vest proprietorship in the land in the 837 cultivating tenants and for that purpose Chap. II provides for carrying out the object in two stages. In the first stage, the property of the landowner is vested in the State. Thereafter the tenant is given the right to acquire that property from the State. What price the tenant is to pay for the land is worked out under section 45, and what compensation the State is to pay to the land owner is worked out under section 52, which however reduces the purchase price arrived at under section 45 for the purpose of giving compensation. It is however clear that tenants are not bound to apply to acquire the land which they hold as tenants and where they do not do so, section 44 (3) provides that they become the tenants of Government and shall be liable to pay to the Government the rent payable in respect of the land from the date on which the right, title and interest over the land vested in the Government. It cannot therefore be said that the scheme which provides for two stages, namely, first acquisition by Government and secondly assignment to tenants is a camoflage devised for the purpose of taking away the money which would otherwise have been payable to the land owner in case the interest of the landowner was directly transferred to the cultivating tenants. It is also clear that there is bound to be a time lag between the acquisition under sections 41 and 42 and the assignment to tenants under section 43 and the subsequent sections and in the meantime the Government would be the owner of the rights acquired. Clearly, therefore Chap. II of the Act envisages first the acquirement of the land owner 's interest by the State for which compensation is payable under s.52. Thereafter the State will assign to such cultivating tenants as may apply the rights acquired by the State and there is likely to be an interval between the two transactions. Besides some cultivating tenants may not apply at all and that part of the property will remain with the State Government. In these circumstances it cannot be said that the scheme evolved in Chap. II is a device for 838 taking away any part of the money to the landowner from the tenant to whom his interest may eventually be assigned. Besides the adequacy of compensation provided under section 52 for acquisition by the State of the interest of the land owner cannot be challenge on the ground that the compensation provided by the law is not adequate: See article 31(2). It is only because the compensation provided under section 52 is a percentage of the purchase price as calculated under section 45 that it appears as if the State is taking away a part of the compensation due to the landowner. Section 52 is however only a method for determining compensation and the whole compensation due to the land owner is to be found in section 52 and it cannot therefore be said that any part of the compensation is being taken away by the State. Similarly the scheme of Chap. III which provides a ceiling is that any land in excess of the ceiling shall vest in the Government under section 62. Thereafter the land so vested in Government can be assigned under section 70 to persons who do not possess any land or possess land less than 5 acres of double crop nilam or its equivalent. It is true that Government may assign the lands to those who apply under section 70 but it is not bound to do so and here again there will be a time lag between the vesting of the excess land in the Government under s.62 and its assignment to those who are eligible under section 70. The charge that in this Chapter there is a device for taking away the compensation due to the land owner is based on the fact that section 72 the person to whom the land is assigned under section 70 has to pay 55 per cent. Of the market value of the land while the person from whom the excess land is taken is not always paid 55 per cent. Of the market value, inasmuch as the percentage goes down to 25 per cent. Of the market value in certain circumstances. But here again the compensation is provided entirely under section 64 and it is that section which sets out the manner in which the compensation is to be 839 provided. The adequacy of that compensation cannot be questioned in view of article 31(2). The fact that under sections 70 and 72 when the Government in its turn assigns land to those who are eligible for such assignment, a different percentage of market value is fixed would not make these provisions a device to take away the money due to those who surrender excess land. As we have already said the compensation to those who surrender excess land is all provided by section 64 and even if there is a difference between the price payable under section 72 by the assignee and the compensation payable to the landowner under section 64 that would not amount to taking away the money of the landowner by a device particularly when the assignment is bound to take place sometime after the property has been acquired by Government. It is also clear from the provisions contained in Chapters II and III of the Act that the main purpose of the Act is to do away with intermediaries and to fix a ceiling and give the excess land, if any, to the landless or those who hold land much below the ceiling. The method employed to carry out this object is first to acquire the land for the State and thereafter to assign it to the cultivating tenants or to the landless or to those with small amounts of land. The main provisions of the Act therefore are clearly within the legislative competence of the State legislature under item 18 of List II and item 42 of List III and this is not being disputed on behalf of the petitioners. But what they contend is that in the process of doing this, the Government has by adopting certain devices taken away the money which was due to the land owner or to the person from whom the excess land is acquired. This argument is however fallacious because the compensation due to the land owner or the person from whom excess land is acquired is not what is provided by section 45 and s 72 but what is provided in section 52 and s 64. The adequacy of that compensation cannot be 840 challenged in view of article 31(2), and there is therefore no justification for saying that the money due to the landowner or the person from whom the excess land is acquired is being taken away by the State. That argument would only be possible if the compensation was the whole amount arrived at under section 45 or under section 72 and from that the Government deducted money due to the landowner. That however is not so and the compensation to which the landowner or the person from whom the excess land is acquired is to be found only in sections 52 and 64 and there is thus no question of taking away any money due to the landowner. Further, whatever unfairness might appear because of the difference between sections 45 and 52 on the one hand and sections 64 and 72 on the other and the manner in which the compensation is shown as a percentage of the purchase price or the market value is removed by the provision in section 80 of the Act. That section provides for the constitution of an agriculturist rehabilitation fund in which the surplus, if any, of the purchase price after the disbursement therefrom of the compensation is to be put along with other moneys. This surplus does not to go to the revenues of the State and the State cannot be said to have taken away for its own purpose any part of the compensation. Further section 80 provides that the fund shall be utilised for rendering help by way of loan, grant or otherwise to persons affected by the Act who are eligible for the same in accordance with the rules framed by the Government. The fund therefore created under section 80 of the surplus, if any, is to be utilised for rendering help to persons affected by the Act. That in our opinion clearly means either the landowners whose rights are affected by Chap. II or the persons from whom excess land is taken under Chap. The surplus money therefore is to be utilised for the benefit of the persons affected by the Act as indicated above. This section also 841 provides that the Government will frame rules with respect to the persons affected and their eligibility for help from the fund. Our attention in this connection has been drawn to the eligibility rules framed under this section for the administration of the fund, and in particular to r. 161 which provides for eligibility for grants and loan. That rule in our opinion goes beyond the scope of section 80 in so far as it provides for making of grants or loans to persons not affected by the Act. We may in this connection refer to r. 161 (a)(i) and (ii) and r. 161 (b) (i) and (ii) which are so framed as to take within their scope even persons not affected by the Act, though r. 161 (a)(iii) and r. 161(b)(iii) are with respect to persons who may be affected by the Act. Rule 161(a)(i) and (ii) and r. 161(b)(i) and (ii) in so far as they take in persons not affected by the Act are ultra vires of the provisions of section 80 and must be struck down on that ground and may have to be replaced by more suitable rules. But the rules which have been actually framed will not affect the provisions of section 80 which clearly show that the fund is for the benefit of those who are affected by the Act, namely, those who are affected by Chapters II and III of the Act, i.e., those landowners whose rights have been acquired under sections 41 and 42 and those persons from whom excess land is taken away under section 62. Section 80 thus clearly shows that any surplus that may arise is not taken away by the State for its own revenue purposes but is meant to be used for the benefit of those affected by the Act and therefore even the apparent result of the difference between sections 45 and 62 and ss 64 and 72 is taken away by the constitution of the fund under section 80, and it cannot be said at all under the circumstances that any device has been employed in the Act to take away the moneys of the landowners or the persons from whom excess land is taken away for the purpose of adding to the revenue of the State. We are therefore of opinion that 842 the Act" cannot be struck down as a colourable piece of legislation which is beyond the competence of the State Legislature. Article 31A was inserted in the Constitution by the Constitution (First Amendment) Act, 1951, with retrospective effect so that it must be deemed to have been in the Constitution from the very beginning, i.e., January 26, 1950. The article was further amended by the Constitution (Fourth Amendment) Act, 1955 which was also made retrospective and therefore article 31A as it stands today must be deemed to have been part of the Constitution right from the start, i.e., January 26, 1950. We are not concerned in the present petitions with cl. (1) of article 31A, which was extensively amended in 1955 but only with cl. This clause originally read as follows: "In this article, (a) the expression 'estate ' shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam or muafi or other similar grant. (b) the expression 'right ' in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder or other intermediary and any rights or privileges in respect of land revenue. " In 1955, in sub cl. (a) the words "and in the States of Madras and Travancore Cochin any janmam rights " were added at the end while in sub cl. (b) the words " raiyat under raiyat " were added after the word " tenure holder " and before the words "or other intermediary". 843 It will be seen therefore that so far as the meaning of the word "estate" is concerned, there was no change in sub cl. (a) and the only change was with respect to the inclusive part of the definition of the word "estate". The word "estate has all along been defined to have the same meaning in relation to any local area as that expression or its local equivalent has in the existing law relating to landtenures in force in that area. It is also remarkable that the word "intermediary" does not occur in sub cl. (a) though it occurs in sub cl. The definition in sub cl. (a) is self contained and there is no scope for importing any idea of intermediary in the definition from sub cl. The reason why the words "other intermediary" are used in sub cl. (b) which defines rights in relation to an estate, is that sub clause mentions a number of intermediaries as such, like sub proprietors, under proprietors, tenure holders but does not give a complete enumeration of all intermediaries that may be existing in an estates all over India and therefore uses the words "other intermediary" to bring in all kinds of intermediaries existing in an estate. As an example we may mention that formerly in Uttar Pradesh there were fixed rate tenants in the permanently settled districts who were also intermediaries and it is such persons or their likes who were brought in within the sweep of the definition of rights in relation to an estate by the use of the words "other intermediary". Therefore, when the words "raiyat, under raiyat " were added in sub cl. (b) in 1955, it was further enumeration within a class already there; further as held in The State of Bihar vs Rameshwar Pratap Narain Singh (1), their inclusion in the circumstances and in the particular setting showed that the words "or other intermediary" did not necessarily qualify or colour the meaning to be attached to these new tenures. The meaning of the word "estate" has however to be found in 844 sub cl. (a) and it is the words used in that sub clause only which will determine its meaning irrespective of whether any intermediary existed in an estate or not. The meaning of the word "estate" in sub cl (a) is the same as it might be in the existing law relating to land tenure in force in a particular area. Where therefore there is an existing law in a particular area in which the word "estate" as such is defined the word would have that meaning for that area and there is no necessity then for looking for its local equivalent. But if in existing law of a particular area the word "estate" as such is not defined, but there is a definition of some other term which in that area is the local equivalent of the word "estate" then the word "estate" would have the meaning assigned to that term in the existing law in that area. In order, however, that one may be able to say that a particular term in an existing law in a particular area is a local equivalent of the word "estate" used in sub cl (a) it is necessary to have some basic idea of the meaning of the word "estate" for that purpose. That basic idea seems to be that the person holding the estate should be the proprietor of the soil and should be in direct relationship with the State paying land revenue to it, when it is not remitted in whole or in part. If a term therefore is defined in any existing law in a local area which corresponds to this basic idea of an estate that term would be a local equivalent of the word "estate" in that area. It is unnecessary to pursue the matter further because this aspect of the case has also been considered in Writ Petition No. 105 of 1961. It may be added that as the definition of the word "estate" came into the Constitution from January 26, 1950, and is based on existing law we have to look into law existing on January 26, 1950, for the purpose of finding out the meaning of the word "estate" in article 31A. 845 Let us therefore look at state of the law as it was in the State of Madras on January 26, 1950, for the area from which these petitions come was then in the district of South Canara, which was then a part of the Province of Madras, which became the State of Madras on January 26, 1950. The usual feature of land tenure in Madras was the ryotwari form but in some districts, a landlord class had grown up both in the northern and southern parts of the Presidency of Madras as it was before the Constitution. The permanent settlement was introduced in a part of the Madras Presidency in 1802. There were also various tenures arising out of revenue free grants all over the Province (see Chap. IV, Vol. III of land Systems of British India by Baden Powell) and sometimes in some districts both kinds of tenures, namely, landlord tenures and the ryotwari tenures were prevalent. There were various Acts in force in the Presidency of Madras with respect to landlord tenures while ryotwari tenures were governed by the Standing orders of the Board of Revenue. Eventually, in 1908, the Madras legislature passed the Madras Estate Land Act, No. 1 of 1908, which was later amended from time to time. It contains a definition of the word "estate" as such in section 3(2) and when the Constitution came into force the relevant part of the definition was as follows: "Estates ' means: (a) any permanently settled estate or temporarily settled zamindari; (b) any portion of such permanently settled estate or temporarily settled zamindari which is separately registered in the office of the Collector; (c) any unsettled palaiyam or jagir; (d) any inam village of which the grant has been made, confirmed or recognised by the British Government, notwithstanding that 846 subsequent to the grant, the village has been partitioned among the grantees or the successors in title of the grantee or grantees. " This Act applied to the entire Presidency of Madras except the Presidency town of Madras, the district of Malabar and the portion of the Nilgiri district known as South East Wynaad. It thus applied to the district of South Canara from where these petitions come. So far therefore as the District of South Canara was concerned, there was an existing law which defined the word "estate" for that local area. Shortly before the Constitution came into force the Madras legislature had passed the Madras Estates (Abolition and Conversion into Ryotwari) Act No. XXVI of 1948. That Act provided for the abolition of estates subject to certain restrictions with which we are not concerned. It also provided for repeal of the Madras Permanent Settlement Regulation, 1802, and the Estates Land Act of 1908 to the extent and from the date on which notifications were made under section 3 of that Act. There was thus no repeal of Act I of 1908 by the Act of 1948, and it is not in dispute that Act No. 1 of 1908 was in force on January 26, 1950, in large parts of the Province of Madras including South Canara, and is still in force in such parts of it as have not been notified under section 3 of the Act of 1948. Therefore, we reach the position that when article 31 became applicable from January 26, 1950, Act No. 1 of 1908 was still in force in large parts of the Madras State and it contained a definition of the word "estate" as such. Further, Act I of 1908 was clearly a law of land tenures as a brief review of its provisions will show. Section 6 of the Act conferred occupancy rights on tenants of certain lands in "estates" as defined in the Act of 1908. Chapter II dealt with the general rights of landlords and tenants. Chapter III dealt with provisions relating to rate of rent payable by tenants and provided for enhancement, reduction, commutation, alteration 847 and remission of rent. Chapter IV dealt with pattas and muchilikas. Chapter V provided for payment of rent and for realisation of arrears of rent. Chapter VI provided the procedure for recovery of rent. Other Chapters dealt with other matters including Chap. X which dealt with relinquishment and ejectment. It is clear therefore that the Act of 1908 was a law relating to landtenures. Therefore, we reach the position that in a law relating to land tenures which was in force in the State of Madras when the Constitution came into force the word "estate" was specifically defined. This law was in force in the whole of the State of Madras except some parts and was thus in force in the area from which the present petitions come. This area was then in the south Canara district of the State of Madras. We are therefore of opinion that the word "estate" in the circumstances can only have the meaning given to it in the Act of 1908 as amended up to 1950 in the State of Madras as it was on the date the Constitution came into force. We have already said that the Act of 1908 dealt with landlord tenures of Madras and was an existing law relating to land tenures. The other class of land tenures consisted of ryotwari pattadars which were governed by the Board 's Standing Orders, there being no Act of the legislature with respect to them. The holders of ryotwari pattas used to hold lands on lease from Government. The basic idea of ryotwari settlement is that every bit of land is assessed to a certain revenue and assigned a survey number for a period of years, which is usually thirty and each occupant of such land holds it subject to his paying the land revenue fixed on that land. But it is open to the occupant to relinquish his land or to take new land which has been relinquished by some other occupant or become otherwise available on payment of assessment, (see Land Systems of British India by Baden Powell, Vol. III, Chap. IV, section II, p. 128). Though, theoretically, according to some authorities, the occupant of ryotwari 848 land held it under an annual lease (see Macleane, Vol. I Revenue Settlement, p. 104), it appears that in fact the Collector had no power to terminate the tenant 's holding for any cause whatever except failure to pay the revenue or the ryot 's own relinquishment or abandonment. The ryot is generally called a tenant of Government but he is not a tenant, from year to year and cannot be ousted as long as he pays the land revenue assessed. He has also the right to sell or mortgage or gift the land or lease it and the transferee becomes liable in his place for the revenue. Further, the lessee of a ryotwari pattadar has no rights except those conferred under the lease and is generally a sub tenant at will liable to ejectment at the end of each year. In the Manual of Administration, as quoted by BadenPowell, in Vol. III of Land Systems of British India at p. 129, the ryotwari tenure is summarised as that of a tenant of the State enjoying a tenant right which can be inherited, sold, or burdened for debt in precisely the same manner as a proprietary right subject always to payment of the revenue due to the State". Though therefore the ryotwari pattadar is virtually like a proprietor and has many of the advantages of such a proprietor, he could still relinquish or abandon his land in favour of the government. It is because of this position that the ryotwari pattadar was never considered a proprietor of the land under his patta, though he had many of the advantages of a proprietor. Considering, however, that the Act of 1908 was in force all over the State of Madras but did not apply to lands held on ryotwari settlement and contained a definition of the word "estate" which was also applicable throughout the State of Madras except the areas indicated above, it is clear that in the existing law relating to land tenures the word "estate" did not include the lands of ryotwari pattadars, however valuable might be their rights in lands as they eventually came to be recognised. 849 Turning now to the district of South Canara and the areas from which the present petitions come it appears that originally the ryotwari settlement was not in force in this area and two kinds of tenures were recognised, namely, mulawargdar and Sarkarigniwargdar. It is, however, unnecessary to go into the past history of the matter, for it is not in dispute that the ryotwari system was introduced in South Canara district in the early years of this century. The history will be found in the Book "Land Tenures in the Madras Presidency" by section Sunderaraja Iyengar, IIEdn., pp. 45 47, where it is said that "after the introduction of the ryotwari system into South Canara, no distinction now exists between the wargadar, the mnulawargadar and kudutaledar and they are all ryotwari pattadars" Therefore, when the Constitution came into force the ryotwari pattadars of South Canara were on the same position as the ryotwari pattadars of the rest of the State of Madras. Further, as the Act of 1908 was in force in South Canara also, though there may not be many estates as defined in that Act in this area it follows that in this area also the word "estate" would have the same meaning as in the Act of 1908 and therefore ryotwari pattadars and their lands would not be covered by the word "estate". Further, there can be no question of seeking for a local equivalent so far as this parts of the State of Kerala which has come to it from the former State of Madras is concerned. We are therefore of opinion that lands held by ryotwari pattadars in this part which has come to the State of Kerala by virtue of the States Reorganisation Act from the State of Madras are not estates within the meaning of article 31A (2)(a) of the Constitution and therefore the Act is not protected under article 31A (I) from attack under articles 14, 19 and 31 of the Constitution. 850 Re. The next contention on behalf of the petitioners is that the Act makes a discrimination between areca and pepper plantations on the one hand and certain other plantations on the other and should therefore be struck down as violative of article 14 of the Constitution. Section 2(39) of the Act defines "plantation" to mean any land used by a person principally for the cultivation of tea, coffee, rubber or cardamom or such other kind of special crops as may be specified by the Government by notification in the gazette. Areca and pepper plantations have however not been included in this definition. It is urged on behalf of the petitioners that in this part of the State there are a large number of areca and pepper plantations which are practically run on the same lines as tea, coffee and rubber plantations and there is no reason why discrimination should be made between areca and pepper plantations on the other hand and tea, coffee and rubber plantations on the other. The discrimination is said to arise from the provisions of section 3 and section 57 of the Act. Section 3(viii) which occurs in Chap. II dealing with the acquisition of the interest of landowners by tenants excepts tenancies in respect of plantations exceeding thirty acres in extent from the application of that chapter. The result of this is that tenants in plantations exceeding thirty acres in extent cannot acquire the interest of the landowners with respect to such plantations and the landowners continue to own such plantations as before. Further section 57 which is in Chap. III provides for exemption of all plantations whatever their extent from the provisions of that Chapter. Thus the ceiling area provided in section 58 will not apply to plantations which will be left out in calculating the ceiling area for the purpose of s.58. Further, s.59(2) provides that in calculating the ceiling area any cashew estate if it was a cashew estate on April, 11, 1957 and continued as such at the 851 commencement of section 59 (provided the cashew estate was principally planted with cashewnuts tree and be a contiguous area not below 10 acres) will continue to be owned or held as before, though the ceiling in such cases would be reduced to half of that provided in s.58. These provisions inter alia confer benefits on those who hold plantations as defined in section 2(39) and also on those who have cashew estates as defined in the Explanation to section 59(2). The contention on behalf of the petitioners is that there is no reason why the same benefits which have been conferred on plantations as defined in the Act should not be conferred on those who hold areca and pepper plantations, and that there are no intelligible differentia which would justify the State legislature in treating the pepper and areca plantations differently from rubber, tea and coffee plantations. Article 14 has been the subject of consideration by this Court on a number of occasions and the principles which govern its application have been summarised in Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar (1), in these words: "(a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles; (c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems 852 made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest; (e) that in order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and (f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. " The petitioners rely on cl.(f) of this summary and contention is that there is nothing to show either in the Act or even in the affidavit filed on behalf of the State in reply to the petitions or in the circumstances brought to the notice of the court that the classification in this case which excludes areca and pepper plantations and includes tea, coffee and rubber plantations is a proper classification based on intelligible differentia which are related to the objects and purposes of the Act. 853 This brings us to a consideration of the reasons which may have impelled the legislature to treat plantations as a class differently from other lands. The objective of land reform including the imposition of ceilings on land holdings is to remove all impediments which arise from the agrarian structure inherited from the past in order to increase agricultural production, and to create conditions for evolving as speedily as possible an agrarian economy with a high level of efficiency and productivity (see p. 178 of the Second Five Year Plan). It is with this object in view that ceiling on land holdings has been imposed in various States. Even so, it is recognised that some exemptions will have to be granted from the ceiling in order that production may not suffer. This was considered in the Second Five Year Plan at p. 196 and three main factors were taken into account in deciding upon exemptions from the ceiling, namely: (1) integrated nature of operations, especially where industrial and agricultural work are undertaken as a composite enterprise, (2) specialised character of operations, and (3) from the aspect of agricultural production the need to ensure that efficiently managed farms which fulfil certain conditions are not broken up. Bearing these criteria in mind it was recommended in the Second Five Year Plan (see p. 196) that the following categories of farms may be exempted from the operation of ceiling namely: "(1)tea, coffee and rubber plantation; (2) orchards where they constitute reasonably compact areas; 854 (3) specialised farms engaged in cattle breeding, dairying, wool raising etc; (4) sugarcane farms operated by sugar factories; and (5) efficiently managed farms which consist of compact blocks, on which heavy investment or permanent structural improvements have been made and whose break up is likely to lead to a fall in production. " The same view has been reiterated in Chap. XIV of the Third Five Year Plan dealing with Land Reform and ceiling on agricultural holdings and para 28 thereof refers to the grounds of exemption envisaged by the Second Five Year Plan. It is obvious therefore that when the State legislature in this case exempted tea, coffee, rubber and cardamom plantations from the ceiling under Chap. III and treated plantations of over 30 acres as a special case for the purpose of Chap. II, it must have had the principles enunciated above in mind to differentiate them from ordinary cultivation of other crops. If that be so, the question immediately arises whether there is any reason for treating areca and pepper plantations differently. If there is none and areca and pepper plantations stand so far as these conditions are concerned on the same footing as tea, coffee and rubber plantations there will clearly be a discrimination against them by the provisions of the Act referred to above. Turning now to pepper plantations, first, we may refer to the information contained in Farm Bulletin No. 55 relating to pepper cultivation in India issued by the Farm Information Unit, Directorate of Extension, Ministry of Food and Agriculture, New Delhi in September 1959. It appears from this bulletin that Kerala is the most important pepper producing State in India, where pepper is cultivated on an organised plantation scale over 855 fairly extensive areas. There are three distinct regions of the pepper growing belt, namely, (1) The Travancore and Cochin region. (2) The Malabar and South Canara region, and (3) the Coorg and North Canara region. Though pepper is essentially a homestead garden crop, growers were encouraged to grow it on plantation scale since 1928 when the price of pepper rose to about Rs. 700/ per candy. Since then there has been a further rise in the price of pepper with the result that new homestead gardens and plantations have sprung up and pepper cultivation has extended a good deal. During the last fifty years, pepper which was largely a household garden crop has emerged as a plantation crop and fairly large sized plantations of pepper exist in the submontane eastern parts of North Malabar and the Hosdrug taluk of South Canara, (the area from which these petitions come). In Hosdrug taluk in particular pepper is grown mostly on large scale plantations and it is here that the finest and the best organised pepper plantations in India exist. Some of the largest plantations among them have an area of a 100 to 150 acres. Pepper vines commence yielding usually from the third year, the yield increasing gradually until the vines come to full bearing in about ten years. The economic life of a vine varies from place to place. From the tenth to the 25th year, the vines are in full bearing, and the yield begins to decline after the 30th year. The initial outlay on pepper plantations is heavy and the pepper crop requires continuous attention and care. The total area under pepper is over 2 lakhs acres out of which about 20,000 acres are under pure pepper plantations. The initial expenditure on laying out a pepper plantation can be recovered only after several years and the best organised and most extensive pepper plantations of India are in the Hosdrug taluk, South Canara (from where these petitions come) and North Malabar. 856 This information taken from Farm Bulletin 55 shows that in the last fifty years pepper in India has reached the plantation stage and in particular in Hosdrug taluk from where these petitions come there are the best organized and most extensive pepper plantations in India. The initial cost of laying out a pepper plantation is heavy and the pepper vines yield nothing for three years and full production comes only in the tenth year. Therefore, where pepper is cultivated as a plantation crop on a large scale the cost is heavy and may be comparable to the outlay on large scale tea, coffee and rubber plantations. It is in these circumstances that we have to consider whether there has been discrimination against pepper plantations when they have not been included in the definition of plantation under section 2(39) of the Act. Turning to arecanut, reference may be made to Farm Bulletin No. 14 issued by the same authority. The major arecanut growing belt in India is again the same regions, i.e., South Canara, Malabar, Coorg and Travancore Cochin along with parts of Mysore, Bengal and Assam. Arecanut is also grown on plantation scale. Since the crop begins to bear fruit after about eight years, large sums have to be expended up to the bearing stage without any income till then. The estimated life of an arecanut garden is about 50 to 60 years, though some of the palms in the garden will be dying occasionally or becoming uneconomic and it will be necessary to replace them. For this reason underplanting is taken up periodically. It appears further from the Proceedings of the Ninth Annual General Special and Twelfth Ordinary Meetings of the Indian Central Arecanut Committee held on January 23, 1958, that the question whether arecanut gardens should be put under ceiling or not and whether there would be hampering of production which would be against national interest if a ceiling were imposed on such gardens had been referred to a Sub committee for consideration. 857 The Sub committee reported that if areca gardens were brought under the ceiling it would hamper production which would be against the national interest and recommended to the Planning Commission, the Central Government and the State Governments that, as proposed by the Planning Commission in respect of tea, coffee and rubber plantations, orchards, specialised farms and efficiently managed farms, arecanut gardens be also similarly exempted from ceiling. The Sub committee also noticed that arecanut cultivation involved heavy capital outlay in establishing, maintaining and protecting the arecanut trees. This recommendation of the Sub committee came up for consideration before the Indian Central Arecanut Committee on January 23, 1958, and was accepted. Thus these proceedings show that fixation of ceiling on arecanut gardens would hamper production which would be detrimental to national economy. It is in this background therefore that we have to consider whether the non inclusion of areca and pepper plantations in the definition in section 2(39) with the result that areca and pepper plantations do not enjoy similar benefits as others, is discriminatory. From what we have said above it has not been shown that there is any appreciable difference between the economics of tea, coffee and rubber plantations and areca and pepper plantations. It is true that plantations in areca and pepper are not so widespread as tea, coffee and rubber plantations but it is equally true that in this particular area from which these petitions come areca and pepper plantations are very common. The fact however that areca and pepper plantations are very common only in this area of the State of Kerala is no reason for treating them differently from tea, coffee and rubber plantations which are apparently more evenly distributed throughout the State. If the criteria evolved by the Planning Commission, as already indicated, apply to tea, coffee and rubber 858 plantations in our opinion they equally apply to areca and pepper plantations and there is no reason for differentiating between these two sets of plantations. So far as areca is concerned we have the recommendation of the Sub committee, mentioned above, endorsed by the Indian Central Arecanut Committee, that it would be detrimental to national economy not to extend the benefit of exemption from ceiling to arecanut plantations in the same way as is done in the case of tea, coffee and rubber plantations. As for pepper we have it from Farm Bulletin No. 55 that the best organised and most extensive pepper plantations of India are in Hosdrug Taluk of South Canara and that some of them are even as large as 100 to 150 acres each. The result of the application of the ceiling and other provisions of the Act would mean the break up of these plantations and may result in fall in production. It is to avoid the break up of tea, coffee and rubber plantations and the consequent fall in production that ceiling has not been imposed on these plantations. The same reasons in our opinion lead to the conclusion that pepper plantations should also be treated similarly. In this connection reference may be made to the opinion expressed in Farm Bulletin No. 55 where the author has said that it is impossible to keep a large plantation of pepper in good tip top condition, without incurring heavy expenditure and without great efforts and has added that in the existing conditions no one planter should have more than 10 acres of pepper plantation. This would seem to suggest that 10 acres is the economic optimum limit for pepper plantations. It is not clear however on what basis this recommendation is based, for undoubtedly the bulletin shows that there are plantations of much larger extent in this area and the plantations here are the best organised and the most extensive throughout the whole of India. The only reason which seems to have been given in support of the opinion that 859 10 acres is the optimum area for a pepper plantation is that one planter in that region was of the view that unless the price of one candy of pepper remained at a high level of anything between Rs. 1,500/ and Rs. 2,000/ it will be impracticable and unprofitable to maintain large scale plantations of pepper in these regions, and if prices go down for below this level, large scale pepper plantations may have even to be abandoned. This does not afford a sufficient basis for holding that 10 acres is the optimum holding for a pepper plantation. In the first place, it is mentioned at p. 8 of the bulletin that pepper began to be grown on plantation scale when the price rose to about Rs. 700/ per candy in 1928. Therefore even if the price falls below Rs. 1,500/ to Rs. 2,000/ per candy there is no reason why pepper cultivation on a plantation scale should become impracticable, particularly as it is unlikely that the cost of only pepper will fall and not all other commodities. At p. 72 the bulletin mentions that the cost of cultivation of pepper can be brought down only if the general price level is brought down substantially. Now there is no reason to suppose that there would be a catastrophic fall in the price level of pepper only which would make all pepper plantations above 10 acres uneconomic and unprofitable. In any case this is not the reason urged on behalf of the State in support of not including pepper plantations in the definition of plantation. In this connection we ought to add that the counter affidavit filed by the respondent is very unsatisfactory; no serious attempt has been made at all to justify the exclusion of pepper and arecanut from the exemption granted to tea, coffee, rubber and cardamom; no facts are stated and no data supplied in reply to the detailed allegations made in the petitions challenging the validity of the classification in question. The only reason given by the State in the counter affidavit is that a plantation crop is generally understood 860 to refer only to tea, coffee and rubber and cardamom. It is not quite clear what exactly is meant by this one sentence in the counter affidavit in support of the definition. If a plantation crop is generally understood to refer to only tea, coffee, rubber and cardamom, it is not understood why the definition provides for extending the word "plantation to other crops by notification. The very fact that power has been reserved for extending the definition by notification to other crops shows that other crops can also be grown on plantation scale. In view therefore of what we have said above with respect to the economics of areca and pepper cultivation, it is obvious that no sufficient reason has been shown for differentiating areca and pepper plantations in this area from tea, coffee and rubber plantations in the State. Making all the presumptions in favour of the classification made under s.2(39) it is clear that there is nothing on the face of the law or the surrounding circumstances which has been brought to our notice in this case on which the classification contained in section 2(39) can be said to be reasonably based. Considering the object and purpose of the Act and the basis on which exemption has been granted under Chapters II and III to plantations as defined in the Act, there appears to be no reason for making any distinction between tea, coffee and rubber on the one hand and areca and pepper on the other in this particular case. It is not as if tea, coffee and rubber are grown only on a large scale while areca and pepper are mostly grown on a small scale. We find from the report of the Plantation Inquiry Commission, 1956, that small holdings exist in tea, coffee and rubber plantations also and are in fact the majority of such plantations. For example, in the report of the Plantation Inquiry Commission relating to coffee at pp. 9 and 14 we find that out of the total number of registered estates more than 4,500 are between 5 acres and 25 acres while only about 2,200 861 estates are above 25 acres. Further there are more than 24,000 estates below 5 acres. Similarly at p. 97, Chap. XI, Part III of the Report dealing with rubber, out of the total of over 26, 709 rubber estates, 23,300 are up to 5 acres, 1,900 up to 10 acres and only about 1,500 above 10 acres. So it appears that the large majority of plantations whether they be of coffee or rubber are below 10 acres and that is also the case with area and pepper plantations. Thus there is no reason for giving preference to plantations of tea, coffee and rubber over plantations of area and pepper for the conditions in the two sets of plantations whether for the purpose of ceiling under Chap. III or for the purpose of acquisition of landowners ' rights under Chap. II are the same. The reasons therefore which call for exemption of tea, coffee and rubber plantations equally apply to areca and pepper plantations and there is no intelligible differentia related to the object and purpose of the Act which would justify any distinction in the case of tea, coffee and rubber plantations as against area and pepper plantations. We are therefore of opinion that the provisions relating to plantations are violative of article 14 of the Constitution. The next question is whether these provisions are severable, that is to say, whether the Kerala legislature would have passed the Act without these provisions. That depends upon the intention of the legislature and as far as we can judge that intention from the provisions of the Act, it seems clear to us that the legislature did not intend that the provisions relating to acquisition by tenants and ceilings should apply to plantations as defined in the Act, so that they may have to be broken up with consequent loss of production and detriment to national economy. It seems that the legislature could not have intended in order to carry out the purpose of the legislation to do so even after breaking up all the plantations which 862 existed in the State. It follows therefore that the legislature would not have passed the rest of the Act without the provisions relating to plantations. As these provisions affect the entire working out of Chapter II and III of the Act which are the main provisions thereof, it follows that these provisions relating to plantations cannot be severed from the Act and struck down only by themselves. Therefore, the whole Act must be struck down as violative of article 14 of the Constitution so far as it applies to ryotwari lands in those areas of the State which were transferred to it from the State of Madras, and we order accordingly. Then we come to the attack that the Act is violative of article 14 on account of the manner in which ceiling has been fixed under section 58 thereof. Section 2(12) defines a "family" as meaning husband, wife and their unmarried minor children or such of them as exist. There are three kinds of families existing in this State namely, the joint Hindu family, Marumakhathayam family and Aliyasanthana family, the latter two being matriarchal. In the matriarchal family the husband and wife are not members of the same family but belong to different families. The joint Hindu family does not merely consist of the husband, wife and unmarried minor children; it consists at least of the husband wife and all the children whether married or unmarried and whether minor or adult. The definition of "family" therefore in the Act is an artificial one which does not conform to any of the three kinds of families prevalent in the State. Turning now to section 58, the ceiling has been fixed in two ways. The first is by reference to a family as defined in the Act of not more than five members which is allowed 15 acres of double crop nilam or its equivalent with an addition of one acre of double crop nilam or its equivalent for each 863 member in excess of five, so however that the total extent of the land shall not exceed 25 acres of double crop nilam or its equivalent. The second is by reference to an adult unmarried person who is allowed 7.50 acres of double crop nilam or its equivalent. It has been urged on behalf of the State that the provisions as they stand do not make any discrimination whatsoever for there is the same provision for all adult unmarried persons and the same for all families as defined in the Act. This in our opinion is an over simplification of the provision relating to ceiling under section 58. On an argument of this kind no provision would ever be discriminatory for it is unlikely that a provision would on the face of it make a discrimination. The discriminatory nature of the provision has to be judged from the results that follow from it and we have no doubt that the results which follow from this double provision as to ceiling are bound to be discriminatory. If the ceiling had been fixed with respect to one standard whether it be of an individual person or of a natural family by which we mean a family recognised in personal law, the results may not have been discriminatory. But where the ceiling is fixed as in the present case by a double standard and over and above that the family has been given an artificial definition which does not correspond with a natural family as known to personal law, there is bound to be discrimination resulting from such a provision. A simple illustration will explain how the results of the manner in which the ceiling has been fixed by section 58 will lead to clear discrimination between person and person. Take the case of an adult unmarried person and a minor who is an orphan with no father, mother brother or sister. Assume further that each owns 25 acres of land under personal cultivation. The former who is an adult unmarried person will retain 7 acres and will have to surrender 17.50 acres as excess land. The latter will be an artificial family under the definition of that word 864 in section 2(12). This follows from the fact that a family consists of husband, wife and their unmarried minor children or such of them as exist. This is also made clear by section 61(2) which shows that even a minor who has no parents, and no brothers or sisters will constitute a family under section 2(12). This minor therefore as constituting a family will be entitled to 15 acres of land and will have to surrender only 10 acres as excess land. No justification has been shown to us on behalf of the State for this discriminatory treatment of two individual persons; nor are we able to understand why such discrimination which clearly results from the application of the provisions of section 58(1)is not violative of article 14 of the Constitution. Examples can be multiplied with reference to joint Hindu families also, which would show that in many cases discrimination will result on the application of these provisions to joint Hindu families. Similar would in our opinion be the case with Marumakhathayam and Aliyasanthana families where as we have already pointed out the husband and wife do not belong to the same family as known to personal law. Discrimination therefore is writ large on the consequences that follow from the provisions of section 58(1). We are therefore of opinion that section 58(1) is violative of the fundamental right enshrined in article 14; as that section is the basis of entire Chap. III the whole Chapter must fall with it. This would be an additional reason why Chap. III should be struck down as violative of Art 14 in its application to ryotwari landas which have come to the State of Kerala from the State of Madras. (6) It is contended that the manner in which the compensation is cut down progressively in sections 52 and 64 of the Act is violative of article 14. The Compensation payable under section 52 is determined in this manner. First the purchase price is arrived at under section 45. Thereafter section 52(2)(b) provides that the landowner or the intermediary, except in the 865 case of religious, charitable and educational institution of a public nature, would be entitled to compensation. The compensation would consist of (1) the value of structures, wells and embankments of a permanent nature situated in the land and belonging to the landowner or the intermediary, as the case may be, and (2) the percentage of the value of interest of the landowner or the intermediary in respect of the land and the improvements other than those falling under sub cl. (i) according to the scales specified in Sch. Schedule II then provides that the first Rs. 15,000/ . of the compensation will be paid in full. Thereafter there will be a reduction of 5 per cent. in each slab of Rs. 10,000/ till we reach compensation above Rs. 1,45,000/ Thereafter the compensation arrived at under section 52 read with section 45 is reduced by 70 per cent so that the landowner or the intermediary gets only 30 per cent of what has been arrived at under section 52 (2) (b) read with section 45. Similarly in section 64 the compensation payable for excess land surrendered is (i) the full value of any structures, wells and embankments of a permanent nature situate in the land and belonging to the person who surrenders such land, and (ii) the percentage of the market value of the land and improvements other than those specified above. Here again on the first Rs. 15,000/ compensation at 60 per cent is to be paid. Thereafter the compensation is reduced by 5 per cent for each slab of Rs. 15,000/ till we reach over Rs. 1,75,000/ when the compensation is reduced by 75 per cent. The contention on behalf of the petitioners is that there is no intelligible differentia on which the purchase price determined under section 45 or the market value is to be reduced by different percentages depending on the total purchase price or the total market value of the interest to be acquired. The reply on behalf of the State is that there is really no discrimination inasmuch 866 as the same percentage is reduced where the compensation payable to different persons is the same. That is undoubtedly so. But that alone is not in our opinion the end of the matter. The question which is posed for our consideration is why a person in whose case the purchase price or the market value Rs. 15,000/ should get the full purchase price or suffer a reduction in the market value at a certain rate while another person in whose case compensation is more than Rs. 15,000/ should suffer reductions at a different rate which reductions become progressively higher as the purchase price or the market value increases. We could understand once the purchase price or the market value had been determined a uniform cut therefrom for all persons entitled to compensation. That would then raise the question of adequacy of compensation and unless the cut was so large as to make the compensation illusory the cut may be protected by Art.31(2). But in the present case there is not a uniform cut on the purchase price or the market value for all persons, the cut is higher as the purchase price or the market value gets bigger and bigger after the first slab of Rs. 15,000/ . This difference in cut in being justified on behalf of the State on the same principle on which (for example) the slab system exists for purposes of income tax. We are however of opinion that there is no comparison between the slab system of income tax rates and the present cuts. Taxation is a compulsory levy from each individual for the purpose of the maintenance of the State. We may therefore reasonably expect that a rich man may be required to make a contribution which may be higher than what may be proportionately due from his income for that purpose as compared to a poor man. This principle cannot be applied in a case where a person is deprived of his property under the power of eminent domain for which he is entitled to compensation. There is no reason why when two persons are deprived of their property one richer than the other, they should be paid at 867 different rates when the property of which they are deprived is of the same kind and differs only in extent. No such principle can be applied in case where compensation is being granted to a person for deprivation of his property. Where one person owns property valued at Rs. 15,000/ while another owns property valued at Rs. 30,000/ , both are equally deprived of the property. When therefore it comes to a question of payment of compensation we can see no reason why a person whose compensation amounts to Rs. 15,000/ should get the whole of it or a large part of it while another person whose compensation amounts to (say) Rs. 30,000/ should get something less than the first person. It is not as if there is some difference in the nature of the property which might justify different payments of compensation. What the Act provides is to work out the purchase price or the market value first for the purpose of determining compensation and then make different cuts from the purchase price or the market value according to whether in one case the purchase price or the market value is Rs. 15,000/ and in another case it is more than Rs. 15,000/ . No justification, is pointed out for this discrimination except the principle on which the slab system for the purpose of income tax is justified. That principles as we have just pointed out does not apply to a case of compensation. Nor are we able to see any rational classification which would justify different cuts based simply on the amount of compensation worked out on the basis of purchase price or market value. The only thing we can see is that because a person is possibly richer he must be paid less for the same type of land while a person who is poorer must be paid more. This kind of discrimination in the payment of compensation cannot in our opinion be possibly justified on the objects and purposes of the Act. The object and purpose of the Act, as we have already said, is to grant rights to cultivating tenants so that they may 868 improve their lands resulting in larger production to the benefit of the national economy. Secondly, the object of the Act is to provide land for the landless and to those who may have little land by taking excess land from those who have large tracts of lands so that peasant proprietorship may increase with consequent increase in production due to greater interest of the cultivator in the soil. But these objects have no rational relation which would justify the making of different cuts from the purchase price or the market value for the purpose of giving compensation to those whose interests are being acquired under the Act. We can therefore see no justification for giving different compensation based on different cuts from the purchase price or the market value as provided in sections 52 and 64 of the Act. We may in this connection refer to Kameshwar Singh vs The State of Bihar (1), in which similar question with respect to compensation provided in the Bihar Land Reforms Act, 1950, came up for consideration. There the Act provided compensation at different rates depending upon the net income. The landowner having the smallest net income below Rs. 500/ was to get twenty times the net income as compensation while the landowner having the largest net income, i. e., above 1,00,000/ was to get only three times of the net income. Intermediate slabs provided different multiples for different amounts of net income. That provision was struck down by the Special Bench of the Patna High Court as violative of article 14. It may be mentioned that decision was given before the Constitution (First Amendment) Act adding article 31A and the Ninth Schedule to the Constitution was passed. Three learned Judges composing the Special Bench who heard that case were unanimously of the 869 opinion that such difference in payment was violative of article 14 and the principle of progressive taxation did not apply to compensation for land acquired. We are of opinion that the view taken in that case is correct and the same applies to the present case. We may point out that case came in appeal to this Court (see, The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh (1) ). The appeal however was heard after article 31A and the Ninth Schedule had been introduced in the Constitution and therefore this Court had no occasion to consider whether such difference in payment of compensation would be violative of article 14. We are therefore clearly of opinion that the manner in which progressive cuts have been imposed on the purchase price under section 52 and the market value under section 64 in order to determine the compensation payable to land owners or intermediaries in one case and to persons from whom excess land is taken in another results in discrimination and cannot be justified on any intelligible differentia which has any relation to the objects and purposes of the Act. As the provision as to compensation is all pervasives, the entire Act must be struck down as violative of article 14 in its application to ryotwari lands which have come to the State of Kerala from the State of Madras. In view of what we have said above on the main points urged in the petitions, it is unnecessary to consider other subsidiary points attacking particular sections of the Act on the ground that they were unreasonable restrictions on the right to acquire, hold and dispose of property under article 19(1)(f). We therefore allow the petitions and strike down the Act in relation to its application to ryotwari lands which have come to the State of Kerala from the State of Madras. The petitioners will get their costs from the State of Kerala, one set of hearing costs. 870 SARKAR, J. I wish to say a few words on two of the questions that arise in these cases. The Act, the validity of which is challenged, provides for acquisition of lands for equitable distribution among the people who require it for cultivation by themselves. It provides for payment of compensation to those whose interests are acquired. It also provides for a mode of valuation of these interests. Then it provides by sections 52 and 64 for payment of compensation at a progressively smaller rate for larger valuations. For the higher slabs in the valuation made as provided by the Act, less and less is paid by way of compensation. It is said that these provisions for progressively diminishing compensation are discriminatory and unconstitutional. This is the first point with which I propose to deal. The question is whether the payment of compensation at a progressively smaller rate as the valuation is higher offends article 14 of the Constitution. Now it is not disputed that progressively higher rate of taxation by an Act taxing income is not unconstitutional. I think such taxation is too well recognised now to be challenged. If that is so and that was the basis on which arguments proceeded in this case I am unable to see that a statute providing for acquisition of property and for payment of compensation at a progressively lower rate for the higher slabs of valuation can be unconstitutional. "The reason for progressive taxation in the case of inheritance taxes and income taxes is the ability of those receiving or giving to pay": Willis 's Constitutional Law (1936 ed.) p. 597. The cases in America that I have looked up also put the matter on the same basis. The classification by progressively higher taxation in a taxing statute is therefore good if based on the tax payers ' ability to pay. It is however said that what applies in the case of a taxing statute cannot apply to a statute 871 permitting acquisition of property on payment of compensation. I do not see why ? I am not aware that the test for determining whether there has been unequal treatment is different with different varieties of statutes, that the test for a taxing statute is not the same as that for a statute providing for acquisition on payment of compensation. I think the test is the same for all statutes, and it is that there must be an intelligible differentia having a rational relation to the object of the Act. Now the object of a taxing statute is to collect revenue for the governance of the country. Ability to pay is acknowledged to be an intelligible differentia having a relation to such an object. The object of the statute with which we are concerned is to acquire land on payment of compensation so that the land may be equitably distributed among the people. If under a statute whose object is to collect revenue more can be legitimately demanded from a person having more, it seems to me that under a statute whose object is to acquire land by paying compensation less can equally legitimately be paid to a person who has more. Ability to pay, or which is the same thing as ability to bear the loss arising from smaller payment received, would in either case be an intelligible differentia having a rational relation to the object of the Act. In one case it serves the object by collecting more revenue for adding to the resources for governing the country and in the other case it serves the object by making it possible for the State by payment of less money out of its resources to acquire lands for better distribution. In both cases the State resources are benefited, in one by augmentation and in the other by prevention of larger depletion. Therefore, I would accept the learned Attorney General 's argument that sections 52 and 64 of the Act cannot be held to be discriminatory and void for the same reason on which 872 progressive rates of taxation are held not to be so in the case of an Income tax Act. The next question on which I wish to say a few words concerns those provisions of the Act which exempt plantations of tea, coffee, rubber or cardamom or such other kinds of special crops as the Government may specify, from certain provisions of the Act. Plantations have been defined in section 2(39) of the Act as land used by a person principally for the cultivation of tea, coffee, rubber or cardamom or other notified crops. No other crop appears to have been notified yet. Section 58 of the Act provides the ceiling area of land which may be held by any individual proprietor. Land above the ceiling has to be surrendered to the Government. Section 57 of the Act provides that this provision would not apply to plantations as defined in section 2(39). Again, Ch. 2 of the Act which gives the tenants the right to purchase land from the landlords and vests in the Government the lands of the landlords not themselves cultivating them above the ceiling fixed, is by section 3 (viii) not made applicable to plantations exceeding thirty acres in extent. The question is whether the benefit so given to the plantations as defined in the Act is discriminatory. The petitioners own large scale cultivation of areca and pepper. They contend that no legitimate differentiation is possible between lands on which areca and pepper are grown and lands on which tea, coffee, rubber and cardamom are grown. No doubt the presumption is that a statute is constitutional but such presumption is not conclusive. It is also true that a court is entitled to assume the existence of all rational basis on which the classification made by an Act may be justified. Even so, it seems to me, that the present classification is, on the materials now before us not justified. It may be that plantations of tea, coffee 873 rubber and cardamom, especially the first three, are usually large in size and require big investments. It may be that they are carried on as industries which give employment to a large labour force. These characteristics may however only justify the putting of large plantations of these crops in a class. The Act however exempts all lands on which tea, coffee, rubber or cardamom is grown irrespective of the size of the business carried on or of labour employed on them, as a class. Materials have been placed before us to show that there are a very large number of smaller plantations growing tea, coffee and rubber. There are also many areca and pepper plantations exceeding thirty acres in area. There is no reason to put tea, coffee, rubber and cardamom plantations in a class as distinguished from similar sizes of plantations of areca and pepper. None at least has been shown by the State of Kerala to exist. The only ground shown in the affidavit of the State of Kerala seeking to justify the classification of tea, coffee, rubber and cardamom plantations in one class is that "plantation crop is generally understood to refer only to tea, coffee, rubber and cardamom" and that "areca and pepper are not generally grown on a plantation scale". I am unable to think that these afford sufficient justification for making a discrimination in favour of tea, coffee, rubber and cardamom plantations. It would appear from the Planning Commission 's Report that other kinds of crops might profitably be grown as plantation crops. In any case, a general understanding even if there was one, is not sufficient basis for discrimination. With regard to the other statements of the State, it is enough to say that the Act does not make a discrimination because of the size of the plantations. Therefore, there is no point in saying that areca and pepper are not grown on a plantation scale. For these reasons I think the provisions in the Act making a discrimination in favour of tea, 874 coffee, rubber and cardamom plantations cannot be upheld. For the same reason, I think the discriminatory treatment made in favour of cashew plantation also cannot be sustained. Sections 3(viii), 57(1)(d) and 59(2) of the Act are therefore, in my opinion, invalid. I think however that these provisions are severable from other parts of the Act. I think it cannot be reasonably said that the legislature would not put the Act into operation if these provisions are taken out of it. The deletion of the provisions does not further make it impossible for the rest of the Act to operate. I am, therefore, unable, to hold that because the sections mentioned above are bad, the whole Act should be declared to be bad. That is all I wish to say in this judgment. With regard to the other matters arising in this case, I agree with the judgment delivered by Wanchoo J. AYYANGAR, J. I entirely agree with the order that the petitions should be allowed and the impugned Act struck down in relation to its application to ryotwari lands which came into the State of Kerala from the State of Madras this being the only relief which the petitioners seek from this Court. My only reason for this separate judgment is because I do not agree with that portion of the reasoning in the judgment just now pronounced in these petitions where it deals with the interpretation of article 31A(2). In my judgment in the companion case Writ Petition No. 105 of 1961 I have endeavored to point out what according to me is the proper construction of this Article and I adhere to that view. I consider that on article 31A(2) as it stands even after the fourth Amendment, properties held on ryotwari tenures and the interest of the royt in such lands would not be "estates" for the purposes of that Article. No doubt as pointed out by me in the 875 other judgment, if there was a law existing on the date of the Constitution in relation to land tenures under which "estate" were defined as including not merely lands held by intermediaries and of others holding under favourable tenurers, but also of ryotwari proprietors having direct relationship with the Government and paying full assessment, such latter category of interests might also be comprehended within the term "estate" by reason of the words "have the same meaning as that expression. .has in the existing law relating to land tenures in force in that area" in Art.31A(2)(a). That is the real basis and the ratio underlying the decisions of this Court in Ram Ram Narain Medhi vs State of Bombay(1), and Atma Ram vs State of Punjab(2). In all other cases (apart from the two categories specially added by the Fourth Amendment) no lands other than those held by intermediaries or held on a favourable tenure would fall within the definition of "an estate" this being according to me the central concept or the thread which runs through the entire definition. The choice between the different interpretations of the Article does not however present itself for the disposal of this petition which has to be answered in favour of the petitioner even on the view of the scope of article 31A which has commended itself to my colleagues. Where an "existing law in relation to land tenures in force in an area" contains a definition of an "estate" and that definition excludes the interest of a roytwari proprietor, the very words of Art.31A(2)(a) which I have extracted earlier would negative the applicability of its provisions to that tenure. article 31A being out of the way I agree that the provision in (1) section 2 (39) of the Act which by definition excludes pepper and areca plantations from the category of the plantations which are named in it which are exempted from the operative provisions of the impugned Act, (2)s. 58 for the 876 determination of the ceiling in respect of different individuals who are brought within the scope of the enactment, and (3) ss.52 and 64 for determining the compensation payable to the several classes of persons whose lands are acquired under Act, all these are violative the guarantee of the equal protection of laws under article 14 of the Constitution. I therefore agree in the order proposed that the petitions be allowed, and with costs. Petitions allowed.

The Kerala Agrarian Relations Act was impugned on various grounds. ^ Held, (per Gajendragadkar, Wanchoo and Das Gupta, JJ.) that (1) the bill which was originally passed by a Legislative Assembly which as dissolved and was reconsidered and re passed by a new legislative assembly did not lapse and validly became the law when the President assented to it after it was passed by the second legislative assembly. 830 Purushothaman Nambudiri vs State of Kerala, [1962] Supp. 1 S.C.R. 753, followed. (II) The Act which made certain deductions from the compensation payable to the landholders under Ch. II and to others who held excess land under Ch. III cannot be struck down as a piece of colourable legislation which is beyond the competence of the State Legislature, and it cannot be said that any device has been employed in the Act to take away the moneys of the landowners or the persons from whom excess land is taken away for the purpose of adding to the revenue of the State. Section 80 of the Act provides for the Constitution of an agriculturist rehabilitation fund for the purpose of rendering help by way of loan, grant or otherwise to persons affected by the Act and eligible for the same under the rules but rr. 161 (a) (III) and 161 (b) (III) are so framed as to take within their scope even persons not affected by the Act. Those rules are ultra vires of section 80 and must be struck down. (III) The lands held by ryotwari pattadars in the area which came to the State of Kerala by virtue of the States Reorganisation Act from the State of Madras are not 'estates ' within the meaning of article 31A(2)(a) of the Constitution and therefore the Act is not protected under article 31A (1) from attack under articles 14, 19 and 31 of the Constitution. State of Bihar vs Rameshwar Pratap Narain Singh, ; , referred to. (IV) The reasons which call for exemption of tea, coffee and rubber plantations from certain provisions of the Act equally apply to areca and pepper plantations and there is no intelligible differentia related to the object and purpose of the Act which would justify any distinction in the case of tea, coffee and rubber plantations as against areca and pepper plantations. The provisions in the Act relating to plantations are violative of article 14 of the Constitution. The provisions relating to plantations cannot be severed from the Act and struck down only by themselves. The whole Act must be struck down as violative of article 14 of the Constitution so far as it applied to ryotwari lands in those areas of the State which were transferred to it from the State of Madras. (V) The manner in which ceiling has been fixed under section 58(1) is violative of the fundamental right enshrined in article 14 of the constitution and as that section is the basis of entire Ch. III the whole chapter must fall with it 831 (IV) The manner in which progressive cuts have been imposed on the purchase price under section 52 and the market value under section 64 in order to determine the compensation payable to landowners or intermediaries in one case and to persons from whom excess land is taken in another, results in discrimination and cannot be justified on any intelligible differentia which has any relation to the objects and purposes of the Act. The provision as to compensation is all pervasive and the entire Act must be struck down as violative of article 14 of the Constitution in its application to ryotwari lands which have come to the State of Kerala from the State of Madras. Per Sarkar, J. Sections 52 and 64 of the Act which provide for payment of Compensation at progressively smaller rates for larger valuations of the interests acquired are not invalid as offending article 14 of the Constitution. The provisions in the act making a discrimination in favour of tea, coffee, rubber and cardamom plantation and also in favour of cashew plantations cannot be upheld. Sections 3(viii), 57 (1) (d) and 59 (2) are therefore invalid. These are however severable from the other parts of the Act and the whole Act cannot be held to be bad merely because those provisions are bad. Per Ayyangar, J. Properties held on ryotwari tenures and the interest of the ryot in such lands would not be "estate" for the purposes of article 31A(2) as it stood even after the Fourth Amendment of the Constitution. Where an existing law in relation to land tenures in force in an area contains a definition of an 'estates ' and that definition excludes the interest of a ryotwari proprietor, the very words of article 31A(2) of the Constitution negatived the applicability of its provisions to that tenure. Ram Ram Narain Medhi, vs State of Bombay, [1959] Supp. I S.C.R. 489 and Atma Ram vs State of Punjab, [1959] Supp. I S.C.R. 748, referred to. Section 2(39) which by definition excludes pepper and areca plantations from the category of the plantations named in it which are exempted from the operative provisions of the impugned Act, section 58 for the determination of the ceiling in respect of different individuals who are brought within the scope of the enactment and sections 52 and 64 for determining the compensation payable to the several classes of persons whose lands are acquired under the Act are all violative of the guarantee of equal protection of laws under article 14 of the Constitution.

iminal Appeal Nos. 211 & 212 of 1969 and Review Petition No. 37 of 1970. Appeals by Special leave from the judgment of the Calcutta 7 High Court dated August 18, 1969 in Criminal Appeal No. 183 of 1961. C. K. Daphtary and section K. Dholakia, for the petitioner. V. A. Seyid Muhammad and section P. Nayar for the respondents. The Judgment of the Court on August 18, 1970 was delivered by Sikri, J. These appeals, by special leave, are directed against the judgment of the High Court at Calcutta whereby the High Court (A. K. Das and K. K. Mitra, JJ.) set aside the order of acuittal and convicted the appellants before us under section 23(1A) of the Foreign Exchange Regulation Act (VII of 1947) hereinafter refered to as the Act. The appellant Girdharilal Gupta, and the appellant Puranmall Jain, were sentenced to rigorous imprisonment for six months each and to pay 750 a fine of Rs. 2,000/ each, in default, to rigorous imprisonment ' for a further period of three months each. The appellant, Bhagwandeo Tewari was sentenced to rigorous imprisonment for three months and to pay a fine of Rs. 1,000/ , in default, to rigorous imprisonment for two months. The firm was sentenced to pay a fine of Rs. 2,000/ . It does not appear that any special leave was obtained on behalf of the firm. In order to appreciate the contentions made before us it is ncessary to state the relevant facts. On October 25, 1958, Customs Preventive Officer B. Roy examined a parcel (wooden case) which purported to contain Rasogolla, Achar, papar and dried vegetable, booked for Hongkong, to be taken by the Swiss Air of which the Indian Airlines Corporation was the ,cargo handling agent. The articles had been declared to be worth Rs. 20/ but the freight which had been paid came to Rs. 127.73 nP. This excited the suspicion of the Customs Preventive Officer, B. Roy, and on opening the parcel and breaking down the case, five hundred ten currency notes of the denomination of hundred rupees each, valuing Rs. 51,0001 , were found. The name of the consignor was Ramghawan Singh at Karnani Mansion, Park Street, Calcutta, but on enquiry no trace could be found of this Ramghawan Singh at Karnani Mansion. In the course of further investigation suspicion fell ,on M/s. Agarwala Trading Corporation of which the appellants Girdharilal Gupta and Fumanmall Jain were the partners and the appellant Bhagwandeo Tewri was an employee. On January 22, 1959, the office of the firm at 191, Mahatma Gandhi Road and the alleged residence of the partners at 11 B Jatindra Mohan Avenue was searched. The appellant, Bhagwandeo Tewari, on being identified by the Traffic Assistant of the Indian Airlines Corporation, Ambar Nath Sen, P.W. 4, and one loader of Thai Airways, section K. Battu, P.W. 26, was arrested. Certain incriminating documents, including account slips and cash books of the firm were seized. On June 3, 1959, a complaint was lodged at the instance of the Assistant Collector of Customs, Calcutta. After stating the above facts it was alleged, in the complaint that sending out money in Indian currency was prohibited under section 8(2) of the Act and any attempt to do the same was punishable under section 23B of the, Act. At the trial a number of witnesses were examined. B. Roy, Customs Preventive Officer, gave evidence regarding the dis covery of Rs. 51,0001 in Indian currency notes, apart from Rasogollas, pickles, etc. on October 25, 1958. No cross examination was directed to show that this did not happen on October 25, 1958. 751 section A. D. Moira, Traffic Assistant of the Indian Airlines Corporation, P.W. 2, who checks freight and does other transshipment work in course of his duties at Dum Dum airport, deposed that he received the relevant documents on October 25, 1958, from Calcutta office. H. , said that the documents were in the handwriting of N. Sen of the Freight Section of the Calcutta Office. Armed with the letter of authority, he took the parcel to the Customs Officer and P.W. 1, B. Roy, asked him to open the parcel and currency notes of the value of Rs. 51,000/ , along, with other things were discovered. R. R. Mukherjee, Traffic Officer of the Indian Airlines Corporation, P.W. 3, is another witness to the recovery of the currency notes. P.W. 4, Ambare Nath Sen, was the Traffic Assistant in the Indian Airlines Corporation, who had typed out the consignment note in respect of this parcel after seeing the shipping bill (Ext. 1). He identified the appellant, Bhagwandeo Tewari, as the, person who had handed over the shipping bill to him and the letter of authority, Ext. 11 He said that he .calculated the freight and received the freight, from this appellant. He further said that this appellant signed the consignment notes in Hindi in his presence and he remembered having seen this appellant writing a postcard on the adjoining table while he was preparing the consignment notes. He further stated that his immediate superior officer, P. K. Chatterjee, was also present at the time this consignment was being booked. Apparently this is not the first time that hiss appellant had gone to the Indian Airlines Corporation because P.W. 4 says that seven days ahead of October 24, 1958, this appellant had called on him with another shipment although that consignment was booked by P. K. Chatterji. Some days after October 25, 1958, this witness P.W. 4was taken by the Customs Officer to some place to find the man who is alleged to have booked the Parcel. Two or three months thereafter he was again taken by the Customs Officers to another place in Burrabazar area, which was the place of Agarwal Trading Corporation, and he said that he Pointed out the appellant, Bhagwandeo Tiwari, as the one who had taken the Parcel to him on October 24, 1958. He was cross examined in order to show that he could not remember customers. He admitted that it was not always possible for him to remember all the men who came in contact with him in the course of his work, but 'he said that he had told C. R. Basu who wag investigating the case that the person who brought the parcel was an oldish man and lean one, and had also described his nose. He further admitted that at the place he identified appellant Bhagwandeo Tiwari, he was the only oldish man there. He 4 Ll 100SupCI/71 752 said that he did not think that he committed a mistake unless the man he identified had a double in the shape of a twin brother and the like. He further admitted that he had been trying to recollect the appearance of the man to reconstruct in his mind the outline of his appearance as far as he could. The evidence of P.W. 4 impresses us and there is no reason why we should not place reliance on his evidence. P. K. Chatterjee, P.W. 5, speaks of the earlier visit of the appellant Bhagwandeo Tiwari as the person who called on him with the shipping bill on October 17, 1958. C. R. Basu, P.W. 6, Officer of the Customs who investigated the case, said that after making enquiries he applied for the issue of search warrant to search the premises No. 191, Mahatama Gandhi Road. He also applied for a search warrant to search the premises of the partners of the firm at 11 B, Jatindra Mohan Avenue. He did not himself search 11 B, Jatindra Mohan Avenue, but went to execute the search warrant at 191, Mahatma Gandhi Road, where on the identification of P.W.4 he arrested the appellant Bhagwandeo Tiwari. He then conducted the search of the premises in the presence of the witnesses and took into possession one Rokar, one khata bahi, one nakal bahi, the attendance register and three account slips which he marked 8, 9 and 10 (Ext. 9 and 9/1 and 9/2 respectively). We may reproduce his evidence regarding the discovery of these account slips because a great deal of argument has been addressed to us on the recovery of these slips. He stated "The three slips, about which I have spoken just now, are in the same condition to day as I found them on the day when they were seized. The witnesses to the search I conducted are Radhesyam Gupta and Lalit Kumar Chandu Lal Parekh. Here is the search list over my signature and the signature of the witnesses. (Ext. 10). " In his cross examined he stated "You are right that Exhibits 9, 9/1 and 9/2 are included in Serial No. 38 of the search list. The search list does not mention the slips separately but only mentions loose sheets in 'a sealed parcel. It has been urged that there is no evidence to show when the seal was opened. It is suggested that these slips have been fabricated and planted. No such question was put to the witnesses and we are 753 unable 'to presume that the investigating officer would go about fabricating account slips in order to rope in the appellants. The prosecution produced two witnesses who had signed the recovery list. The evidence of Radheshyam Gupta, P.W. 7, must be discarded because although he was examined before the Chief Presidency Magistrate he was not made available for cross examination. The learned counsel, Mr. Bhattacharya, suggested that if this witness had been produced for cross examination he would have deposed against the prosecution. We are unable to draw any such presumption. The other witness was Lalit C. L. Parekh, P.W. 8. He had signed the search list but on cross examination he stated that "Basu had taken slips of paper from the 'Agal Bagal ' of the guddy, by which I mean from underneath the Takia on the bed". He further said that "bits of paper Basu found from a wooden case as well." He further stated as follows "You are right that Basu placed all these bits of papers at one and the same place. How many pieces ? I cannot say. I did not count. By guess I can say that the number of bits of paper would run to 50 or 60. 1 signed all the pieces of paper which were found so. " The learned counsel fastens on the last line and says that these slips do not bear the signature of Lalit C. L. Parekh, and therefore it is clear that these have been fabricated later. We are unable to sustain this contention. The witness had signed a number of documents including the search list and he pay well have thought that he had signed every piece of paper which was seized. No such question was put to the investigating officer. P.W. 11, N. R. Paul, who was the assistant attached to the Appraising Department of the Calcutta Customs deposed re garding the preparation of the shipping bill. It appears that the shipping bill bore the words "Thai Airways Co." and these words were scored out and "Swiss Air" written in hand. He could not say who corrected the entry but nothing turns on this because it may be that the original idea was to send the parcel by Thai Airways but later on for some reasons it was not possible to send that parcel through this airways. The prosecution led evidence to show that as a matter of fact appellant Bhagwandeo Tiwari had approached some body in Thai Airways but we need not dwell on, this part of the case. 754 The prosecution also produced Shridhar Chatterjee, hand writing expert, who examined the signature reading as "Ram Chandra" writing in Hindi and in pencil in the two way bills, Ext. 3 and 4, and the specimen writing, He was of the opinion that the writer of the specimen writing was the writer of the signature "Ram Chandra" appearing in the airway bill. We may mention that Bhagwandeo Tiwari is alleged to have signed as "Ram Chandra". The expert also gave the opinion that. the type written papers, Exts. 11 and IX had been typed on the same machine. Exhibit 9/2, 'one of the seized account slips, is a very im portant document. The official translation is printed in the records and reads: "Translation of EXT.9/2 dated 24 10 58. . . 2/8/ 4 cases Godown A/C 1 . . . /8/ 3 "opened below and goods brought. In Cash (Paper Torn) cases bound (Pettis)(?). . . /4/ Case I ' (Illegible) /2/ Illegible (Paper tom) Cases (Pettis)(Illegi ble) 2 R.B. /151 for coming and going to I.A.C. Rs.223/8/. 4/51 127/73 HongkongShanghai (torn & illegible)" The High Court had to translate it again and the last line was translated into "Hongkong Lagaya" in, place of "Hongkong Shanghai". In the account books of M/s. Agarwala Trading Corporation (Exts. 21 and 21/1) under the entries dated October 24, 1958, on which date the booking is alleged by the prosecution to have been done, on entry appears as follows: "Rs. 415/ Through Bhagwan Deo /8/ Colli (Janka) 115/ Rickshaw fare 2/ 14/ Cart Charge Rs. 1/8/ Through Ghanshyam & Pandey /4/ Bus fair 1/4/ Bus fair 1/4 Bus Tarm" It will be noticed that the same items appear in Ext. The breakup in exhibit 9(2) is slightly different but in the account book 755 the four annas and two annas entries have been added to Rs. 2/8/to make Rs. 2/14/ as cart charge. Again the entries in Ext. 9/1 are as follows "/1/ But hire for going home. 1/4/ Caine from home to Thai (?) Taxi /12/ Riksha hire from Thai /1/ Coolie /4/ Thai Office Colie ______________________ 2/6/ Rs. 147/10/ In Cash" The corresponding entry in the account books are as follows "Rs. 2/6/ (Bus fare /1/Taxi fare Rs. 1/4/ Rickshaw Rs. /12/ Cooli 151 " It is true that the entry of Rs. 127/73 which exists in Ext. 9/2 has not been carried over into the account books but perhaps that would have been even too much for an accountant to do. He never dreamt that these entries, of Rs. 4/5/ and Rs. 2/6/ in the account books would be seized upon by the prosecution to complete the case against the appellants. Be that as it may, the entries in the account books demolish the case of defence that these slips were fabricated and that they had nothing to do with the firm. exhibit 9/2, on the other hand, clearly shows that somebody had gone to the I.A.C. office and paid /15/ for going and coming to the I.A.C. office and paid the incidental charges. Mr. Bhattacharya, who followed Mr. Chagla for the appellants, contends that a serious question of law is involved, the question being that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated. It is a novel proposition and he has not been able to cite any authority or principle in support of it. It all depends on the facts in each, case. At any rate here we have the corroborative evidence of P.W. 8, who signed the search document and also the entries themselves in the account books and their tallying with the slips. It was urged on behalf of the defence counsel that these slips could not be taken into consideration at all because they are not evidence. We are unable to appreciate why they are not evidence. These are part of the things discovered during search and 756 if the entries therein are carried into the account books there is no reason why these things could not be looked at. The learned counsel has taken us through the judgments of the Chief Presidency Magistrate and the High Court. We are in agreement with the conclusions arrived at by the High Court. We have ourselves gone into the evidence as the High Court had reversed the order of acquittal and in one or two places made minor mistakes. Mr. Chagla, while arguing on behalf of the partners, said that there was evidence that one, partner was not in Calcutta on the 24th or 25th October, 1958,as he was in Japan. But even if we take this fact into consideration, which fact was not brought to the notice of the Chief Presidency Magistrate or the High Court, it does not help him at all. Entries were made in the account books and it was the firm 's money which was spent and he being an active partner is clearly liable under section 23C(1) of the Act which reads : "23C(1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and, was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly; Provided that nothing contained in this sub section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to pre vent such contravention. " This sub section deems the appellant Girdhari Lal Gupta guilty. The question is : Has he proved that the contravention took place without his knowledge and he exercised due diligence to prevent such contravention ? What he said in his statement under section 342, Cr P.C., was that he alone looks after the affairs of the firm. There is also no evidence to show that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention. The entries were there in his account books and the only thing that, he had to say about these entries in his account books is that they pertain to the routine work of the firm. Under the circumstances we are unable to exonerate him of the charge. As far as the other partner, Puramnall Jain, is concerned ' he stated that he does not look after the affairs of the firm and further 757 that he stays all along at Sriganganagar in Rajasthan and does not stay in Calcutta. The prosecution has not led any reliable evidence to prove that he took any active part in the conduct of the business of the firm. In these circumstances we are inclined to give him the benefit of doubt and acquit him. In the result the appeal of Puranmall Jain is allowed and he is acquitted of the charge. Ms bail bond shall stand cancelled. The appeals of Girdhari Lal and Bhagwandeo Tewari are dismissed. [After the above judgment was delivered Review Petition No. 37 of 1970 was filed. The judgment of the Court thereon was delivered on February 18, 1971 by] Sikri, C.J. We disposed of Criminal Appeals Nos. 211 and 212 of 1959 by our judgment dated August 18, 1970, whereby the appeals of Girdharilal Gupta, and Bhagwandeo Tewari against. their convictions were dismissed. Girdharilal Gupta put in this review petition stating that the counsel had omitted to bring to our notice the provisions of section 23C(2) of the Foreign Exchange Regulation Act, 1947 hereinafter referred to as the Act which has a vital bearing on the case. The judgment in Criminal Appeal No. 211 of 1959 has, therefore, been re opened. We may mention that Bhagwandeo Tiwari has not filed a review petition against his conviction, upheld by this Court. Mr. Daphtary contends that on the facts, as found by us, the appellant, Girdhari Lal Gupta, does not come within the purview of section 23C(1) or section 23C(2) of the Act. Sections 23C(1) and 23C(2) read as follows "23C. (1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this subsection shall render any such person liable to punishment if he proves that the contravention took place, without his knowledge or that he exercised all due diligence to prevent such contravention. 23C. (2) Notwithstanding anything contained in sub section (1), where a contravention under this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the 758 part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation. For the purposes of this section, (a) " company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm. Mr. Daphtary contends that there is no evidence to show that the appellant was in charge of the conduct of the business of the firm at the relevant time and therefore, section 23C(1) does not apply. He further says that as the appellant was abroad, the contravention took place without his knowledge. We may mention, however, that the defence that he was abroad at the relevant time was not taken in the courts below. At the time of the last hearing learned counsel produced the passport of the appellant before us from which it appears that he was abroad at that time and came back a few days after the alleged contravention. Mr. Daphtary further contends that section 23C(2.) also does not apply because there is no evidence that the contravention took place with the consent or connivance of, or was attributable to any neglect on the part of, the appellant. He referred to us a number of authorities of the High Courts in India which have interpreted similar provisions and we shall refer to them later. It seems to us quite clear that section 23C(1) is a highly penal section as it makes a person who was in charge and responsible to the company for the conduct of its business vicariously liable, for an offence committed by the company. Therefore, in accordance with well settled principles this section should be construed strictly. What then does the expression "a person in charge and responsible for the conduct of the affairs of a company mean ' ? It will be noticed that the word 'company" includes a firm or other association and the same test must apply to a director in charge and a partner of a firm in charge of a business. It seems to us that in the context a person 'in charge ' must mean that the person should be in over all control of the day to day business of the company or firm. This inference follows from the wording of section 23C(2). It mentions director, who may be a party to the policy being followed by a company and yet not be in charge of the business of the company. Further it mentions manager, who 75 9 usually is in charge of the business but not in over all charge. Similarly the other officers may be in charge of only some part of business. In State vs section P. Bhadani(1), Kanhaiya Singh, J., in construing a similar provision of the Employees Provident Fund Act (1952). Section 14A held that the first sub section would be confined only to officers in the immediate charge of the management of the company. Later he observed that "it is, therefore, manifest that all the officers of the company not in direct charge of the management of the business are immune from the liability for the offence, unless they have contributed to its commission by consent, connivance or neglect." In R. K. Khandelwal vs State (2 D. section Mathur, J., in construing section 27 of the Drugs Act, 1940, a provision similar to the one we are concerned with, observed : "There can in directors who merely lay down the policy and are not concerned with the day to day working of the Company. Consequently, the mere fact that the accused person is a partner or director of the Company, shall not make him criminally liable for the offences committed by the Company unless the other ingredients are established which make him criminally liable. " In The Public Prosecutor vs R. Karuppian(3), Somasundaram J., while dealing with a case arising under the (section 17(1)) observed that the Secretary of the Co operative Milk Society, on the facts of the case, could not be held to be a person in charge of the Society. On the facts of that case the business of selling milk was done by the clerk of the Society and the Secretary was only an honorary Secretary and was not coming to. the Society daily. The only evidence led by the prosecution on this part of the case was of one Sohan Lal Gupta who is a broker. He stated in examination in chief : "Who exactly the proprietors of the said firm are, I cannot say. But I can say this much that whenever I had been there I was referred to Girdharilal Gupta (accused No. 2) and Puranmal Jain (accused No. 3) as the Maliks of the firm. I see accused No. 2 Girdharilal Gupta in court (identified him). I know that Bhagwandeo Tewari (accused No. 4) is the Cashier of that firm. I see him here in court (identifies accused No. 4). (1) A.I.R. [1959] Pat.9. (2) (3) A.I.R. [1958] Mad. 760 .lm15 I know of another employee of the firm the manager, Jagdish Prasad. I know another employee of the firm the accountant, Shyamlal. " The appellant in 'his statement under section 342, Cr. P.C. stated thus "You ask me, Sir, if I have to say anything about the evidence led in this case to the effect that I happen, to be a partner of accused No. 1 firm. To that, Sir, my answer is that I am. " The evidence to that end is correct. I shall only add that I alone look after the affairs of _this firm." Mr. Daphtary says that on this evidence it cannot be held that the appellant was in charge of the conduct of the business. We are unable to agree with him on this point. The appellant has himself stated that he alone, looked after the affairs of the firm. This means that the is in charge of the business of the firm within the meaning of the section though there may be a Manager working under him. The question then arises whether the appellant was in charge of the conduct of the business of the firm at the time the contravention was committed. He was not physically present, in Calcutta at the time of the commission of the offence and the prosecution evidence shows that one Jagdish Prasad. was the manager of the firm. It is true that the onus of proving that the appellant was in charge of the conduct of the business of the company at the time the contravention took place lies on the Prosecution, but when a partner in charge of a business proceeds abroad it does not mean that he ceases to be charge, unless there is evidence that he gave up charge in favour of another person ' Therefore, we must hold that the appellant was in charge of the business of the firm within the meaning of sec. 23C(1). But while imposing sentence a Court might take notice of the fact that a person is being vicariously punished for an offence and if he shows that it is possible that the contravention of the Act took place without his knowledge or neglect a sentence of imprisonment may not be imposed. In this case he was abroad at the time of contravention and it is possible that the contravention took place without his knowledge or because of lack of diligence. It seems to us that on the facts of this case a sentence of fine of Rs. 2,000/ will meet the ends of justice. The learned counsel for the respondent State urges that this is not a case fit for review because it is only a case of mistaken judgment. But we are unable to agree with this submission 761 because at the time of the arguments our attention was not drawn. , specifically to sub section 23C(2) and the light it throws on the interpretation of sub section In the result the review petition is partly allowed and the judgment of this Court in Criminal Appeal No. 211 of 1969 modified to the extent that the sentence of six months ' rigorous. imprisonment imposed on Girdharilal is set aside. The sentence , of fine of Rs. 2,000/ shall, however, stand. G.C. Ordered accordingly.

An air parcel declared by the consigner to contain rasogollas and other edibles was found to contain Rs. 51,000 worth of Indian currency notes. The parcel was booked to be sent from Calcutta to Hong Kong. The consignor 's name as given. on the parcel was found to be false and on investigation the suspicion of the customs authorities fell on the appellants two of whom were partners in a firm, the third being an employee of the firm. The office of the firm was searched. Certain incriminating documents including account slips and cash books of the firm were seized. In a complaint filed by the Assistant Collector of Customs against the appellants and their firm it was alleged that sending out money in Indian currency was prohibited by section 8(2) of the Foreign Exchange Regulation 7 of 1947 and any attempt to do the same was punishable under section 23B of the Act. The trial court acquitted the appellants but the High Court in appeal convicted them under section 23(1A). By special leave appeals were filed in this Court. Judgment was delivered on August 18, 1970. Thereafter review petition No. 37 of 1970, was filed. A further judgment in respect of the contention raised therein as to the interpretation of section 23C(i) was delivered on February 18, 1971. HELD : (i) The proposition that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated is a novel one with no principle or authority to support it. It all depends on the facts of each case. In the present case there was the corroborative evidence of P.W. 8 who signed the search document and also the entries themselves in the account books and their tallying with the slips. [755 G] (ii) There was no substance in the argument that the account slips could not be taken into consideration because they were not evidence. These were part of the things discovered during search and if the entries therein were carried into the account books there was no reason why they could not be looked at [755 H] (iii) In the context of section 23C(1) a person 'in charge ' must mean that the person should be in over all control of the day to day business of the company or firm. The inference follows from the wording of section 23C(2). It mentions director who may be a. party to the policy being followed by 749 a company and yet not be in charge of the business of the company. Further it mentions manager who usually is in charge of the business not in over all charge. Similarly the other officers may be in charge of only some part of the business. [758 G 759 A] State vs section P. Bhadani, A.I.R. 1959 Pat. 9, R. K. Khandelwal vs State and Public Prosecutor vs R. K. Karuppian, A.I.R. 1958 Mad. 183, referred to. In the present case the appellant G had himself stated that he alone looked after the affairs of the firm. This meant that he was in charge within the meaning of the section though there may be a manager working under him [760 C D] When a partner in charge of a business proceeds abroad it does not mean that he ceased to be in charge, unless there is evidence that he gave up charge in favour of another person. Therefore it must be held that the appellant was in charge of the business of the firm within the meaning of section 23C(1). [760 E F]. In view of the fact that G was abroad at the time of contravention it was possible that the contravention took place without his knowledge or lack of diligence. He was being vicariously punished. In such a case a. sentence of imprisonment may not be imposed but a sentence of fine only would meet the ends of justice. [760 G] (iv) As regards appellant P the prosecution had been unable to prove by any reliable evidence that he took any active part in the conduct of the business of the firm. He must therefore be given the benefit of doubt and acquitted. [757 A] (v) The case was fit for review because at the time of arguments the attention of the court was not drawn specifically to sub section 23C(2) and the light it throws on the interpretation of sub s.(1). [761 A]

ION: Civil Appeal No. 3054 of 1987. From the Judgment and order dated 20.2. 1987 of the Allahabad High Court in Civil Revision No. 157 of 1986. A.B. Diwan, Sandeep Narain and Shri Narain for the Appellant. V.M. Tarkunde, Shakeel Ahmed Syed for the Respondent. The following Judgments were delivered by SABYASACHI MUKHARJI, J. Special Leave granted. In the Special Leave Petition notice was issued on 13th of July, 1987 and it was directed that the matter would be disposed of at the notice stage. After hearing the rival contentions, we grant leave to appeal and dispose of the appeal by the order hereunder. This is an appeal from the judgment and order of the learned single judge of the Allahabad High Court Lucknow Bench) in Revision Petition No. 157 of 1986. It appears that the appellant, a State Government enterprise, on or about 17th of May, 1983 entered into a contract with the respondent a private limited company for the supply and installation of a Vanaspati manufacturing plant at Harducharu 1129 in the District of Nainital, in the State of Uttar Pradesh. The contract bond contemplated, according to the appellant, guaranteed performance of work at various stages in accordance with the time schedule prescribed therein and provided for completion and commissioning of the plant after due trial run by the 15th May, 1984. The appellant contends that time was essentially and indisputably the essence of the contract. The contention of the appellant was that as per the terms and conditions of the contract bond, the respondent was to furnish a performance bank guarantee for Rs 16.5 lakhs and yet another bank guarantee for Rs.33 lakhs as security for the monies advanced by the appellant to the respondent for undertaking the work. Both these two guarantees as also the contract bond entitled the appellant to invoke them and call for their realisation and encashment on the respondent 's failing to perform the obligations for which the appellant was made the sole judge The 15th of May, 1984 was the date fixed for completion and commissioning of the plant after 15 days ' trial run for commercial production. It was alleged that between the 26th of December, 1984 and 28th of January, 1985 the respondent defaulted at various stages and finally failed to complete the work within the stipulated time. The appellant invoked the two guarantees one after the other. The appellant thereafter on 15th March, 1985 proceeded to have the plant completed and the plant was formally inaugurated. The appellant contends that the plant could actually be commissioned for commercial production in July/August, 1985. The respondent on 4th of August, 1986 filed a petition under section 41 of the (hereinafter called the ), in the Court of the Civil Judge, Lucknow praying for an order restraining the appellant from realising and encashing the bank guarantees. The learned Civil Judge for the reasons indicated in his order dated 8.8.86 declined to issue any injunction and dismissed the application Being aggrieved by the aforesaid decision, the respondent went up before the Allahabad High Court. The learned Single Judge of the Allahabad High Court, by the impugned judgment of 20th February, 1987, allowed the revision petition and held that the invocation of the performance guarantees were illegal and further held the contentions of the appellant that the performance guarantees constituted independent and separate contracts between the guarantor bank and the beneficiary and created independent rights, liabilities and obligations 1130 under the guarantee bonds themselves, as being "technical pleas. " On 17th May, 1983, as mentioned hereinbefore, an agreement had been executed between the appellant and the respondent wherein it was decided as follows: "WHEREAS THE PCF (the appellant herein) has decided to set up a Vanaspati Plant of 62 5 M.T. per day Vanaspati Capacity, comprising of 70 M.T. per day hardening capacity based on 95% usage of soyabean oil as raw oil 62.5 M.T. per day, post refining capacity, 72 M.T. deodoursisation capacity and 72 M.T filling and packing capacity, complete with all necessary utilities such as water and steam Distribution Equipments oil Storage Section Electrification and Distribution Equipments Automatic Weighing filling and packing/sealing equipments and fire fighting equipments etc, at Halducharu, District Nainital (UP) lying at Bareilly Haldwani road about 3.5 Kms. from Lalkuan towards Haldwani." and the agreement further stated: "AND WHEREAS the seller (the respondent herein) has undertaken to provide technical know how and fabricate, design, engineer, manufacture, procure, import, supply, erect, instal, give trial runs and commission the Vanaspati Complex as referred to above complete in all respects at Halducharu District Nainital (U.P.) as per specifications contained at Annexures 'A ' to 'Q ' and signed by both the parties in token of incorporation as an integral part of this agreement with guaranteed performance on the terms and conditions hereinafter appearing and contained. AND WHEREAS the contract price here in after mentioned is based on the 'Seller 's undertaking to com mission and make ready for commercial production the said Vanaspati Complex by May 15, 1984 and if the seller fails to do so the contract price shall stand reduced to the extent as hereinafter provided. AND WHEREAS the contract price hereinafter mentioned is also based on the guaranteed performance of the said Vanaspati Complex as here in after provided and it is a term of this Agreement that if the said Vanaspati Complex fails to give the guaranteed performance as hereinafter 1131 specified, the contract price shall stand reduced to the extent hereinafter provided. " Clause 1.6 stipulated that the date of commissioning and handing over shall be the date on which the PCF takes over the complete Plant after successful commissioning and fulfilling of guaranteed performance specified in the agreement. This clause further stated: "The seller shall be deemed to have completed the erection and commissioning after giving successful trial runs for continuous period of 15 days with all the Plants working simultaneously. However, the seller should fulfil the Warrantees of individual plants separately also as given in the specifications. The complete Warrantees/Performance guarantees shall be demonstrated by the seller over a continuous period of 15 days. " Thus the mutual obligations of the sellers as well as purchasers were stated in the contract. It is not necessary to set out in detail all the clauses, but clauses 5 2 and 5 3 are relevant and provide as follows: "5.2 In case the seller fails to fulfil and his obligations as referred to in this agreement the PCF shall be at liberty to get the same completed through and other agency or agencies without the approval of the seller and all the additional expenses so incurred by the P.C.F. shall be recoverable from the seller. 5.3 The seller also agrees to exclude/include some of the machines equipments components from the plant as may be desired by the PCF during the course of this agreement, and cost of such machines equipments components on reasonable actual basis shall deducted/added to from the contract price and thus the reduced/increased contract price shall be paid by the PCF However, the PCF should intimate such exclusion/inclusion within two months from the date of signing of the agreement. The said price of Rs.1,65,00,000 (Rs. One crores and sixty five lakhs only) shall be paid by the PCF to the seller in the following manners: on or about 25th of June, 1983 two bank guarantees were executed by Bank of India, Ghaziabad and the bank guarantee 1132 numbered ]7/16 provided,inter alia, as follows: "NOW, THEREFORE, the Bank hereby guarantees to make unconditional payment of Rs.16.5 lacs (Rupees six teen lacs fifty thousand only) to the Federation on demand at its office at Lucknow without any further question or reference to the seller on the seller 's failure to fulfil the terms of the sale on the following terms and conditions (emphasis supplied) A) The sole judge for deciding whether the seller has failed to fulfil the terms of the sale, shall be the PCF. B) This guarantee shall be valid upto twelve months from the date of issue. i.e upto 24.6.84. C) Claims. if any must reach to be Bank in writing on or before expiry date of this guarantee after which the Bank will no longer be liable to make payments to the pCF D) Bank 's liability under this guarantee deed is limited to Rs.16.5 lacs (Rupees sixteen lacs fifty thousand only). E) This guarantee shall not be revoked by the Bank in any case before the expiry of its date without written permission of the Federation. The Bank guarantee No. 17/ 15 of the said date further went on to provide as follows: "AND WHEREAS to secure the said advance, the seller requested the Bank to furnish a Bank Guarantee of the said amount of Rs.33 lacs (Rupees thirty three lacs) in favour of the PCF and the Bank accepted the said request and agreed to issue the required Bank guarantee in favour of the Feder ation. Now, therefore, in consideration of the aforesaid advance of the said sum of Rs 33 lacs (Rupees thirty three lacs only) to be paid by the PCF to the seller as aforesaid the Bank hereby agrees and guarantees to make unconditionally immediate payment to the Federation at its office 1133 at Lucknow of the sum of Rs.33 lacks (Rupees thirty three lacs only) or any part thereof, as the case may be, due to the PCF from the seller at any time on receipt of the notice of demand without any question or reference to the PCF or to the seller on the seller 's failure to fulfil the terms of the said advance on the following terms and conditions: (Emphasis supplied) 1) The PCF shall be sole judge to decide whether the seller has failed to fulfil any terms and conditions of the said advance and on account of the said failure what amount has become payable to the PCF under this guarantee 2) This Guarantee shall be valid upto 15 5.84 (Fifteenth May 1984) after which period this guarantee shall stand cancelled and revoked. 3) The claims of the PCF, if any, under this guarantee, must reach the Bank on or before the date of expiry of this guarantee and after the date of expiry, no claim will be entertained by the Bank. 4) The Bank shall not revoke this guarantee in any case before its expiry date of 15.5 1984 except with the writ ten permission of the PCF. " I have set out in extenso the terms in order to highlight the fact that under the terms agreed to between the parties, there is no scope of injunction . The trial Court in its judgment held that the Bank should be kept to fulfil its obligations and commitments and the Court should not come in the way But that principle was distinguished by the High Court on the ground that the respondent was seeking relief against the U.P. Cooperative Federation Ltd. and the subject matter of the dispute itself being as to whether the bank guarantee could be invoked and encashed The High Court was of the view that even otherwise it cannot be doubted that the appellant cannot be permitted to take advantage of illegally invoking a bank guarantee on a technical plea that the guarantee was independent of the contract and involving only the bank and the opposite party at pleasure. The High Court was of the view that prima facie it appeared that the plant was handed over 1134 after a trial run and that the commercial production had started and A this has not been assailed as a fact. The High Court was of the view, that in these circumstances this cannot be said that the invocation order was final and irrevocable. The High Court was further of the view that having taken over the possession of the plant it was necessary to consider all the aspects and held that the bank guarantees could not be invoked. The High Court was of the view that it was not a question of restraining the performance of any bank guarantee. I am, however, unable to agree. The principles upon which the bank guarantees could be invoked or restrained are well settled our attention was also drawn to several decisions of the High Court as well as of this Court. Reference had also been made to some of the English decisions. So far as the position of English law is concerned, the principles by now are well settled. I will refer to some of the decisions and explain the position. The question arose before the Court of Appeal in England in Hamzeh Melas & Sons vs British Imex Industries Ltd., [1958] 2 Q.B .D. 127. There the plaintiffs, a Jordanian firm, contracted to purchase from the defendants, a British firm, a large quantity of reinforced steel rods, to be delivered in two instalments Payment was to be effected by the opening in favour of the defendants of two confirmed letters of credit with the Midland Bank Ltd., in London, one in respect of each instalment. The letters of credit were duly opened and the first was realized by the defendants on the delivery of the first instalment. The plaintiffs complained that instalment was defective and sought an injunction to bar the defendants from realizing the second letter of credit. Justice Donovan refused the application. The plaintiffs appealed to the Court of Appeal in England. It was held that although the Court had wide jurisdiction to grant injunction, this was not a case in which, in the exercise of its discretion, it ought to do so. The Court of Appeal emphasised that an elaborate commercial system had been built up on the footing that a confirmed letter of credit constituted a bargain between the banker and the vendor of the goods, which imposed upon the banker an absolute obligations to pay, irrespective of any dispute there might be between the parties whether or not the goods were up to contract. The principle was that commercial trading must go on the solemn guarantee either by the letter of credit or by bank guarantee or irrespective of any dispute between contracting parties whether or not the goods were upto contract. The banks cannot be absolved of their responsibility to meet the obligations. Lord Jenkins L.J. Observed that a vendor of goods selling against a con 1135 firmed letter of credit was selling under the assurance that nothing would prevent it from receiving the price. That was of no mean advantage when goods manufactured in one country were sold in another. Though, in this case no international trade was involved, bank guarantee was uninvocable and on that assurance parties have bargained This principle enunciated by Lord Justice Jenkins has been invokved by this Court in some decisions in case of confirmed bank guarantee. The Court of Appeal in England had occasion once again to consider this question in Elian and Rabbath (Trading as Elian & Rabbath). vs Matsas and Matsas & ors. , [1966] 2 Lloyd 's List Law Reports 495. In that case injunction was granted to prevent irretrievable injustice. There the facts were peculiar In that case the first defendants ' Greek motor vessel Flora M was chartered by Lebanese charterers for carriage of plaintiffs ' cargo (consigned to Hungary) from Beirut to Rijeka. Discharge was delayed at Rijeka and shipowners exercised lien on cargo in respect of demurrage Third defendant bank put up guarantee in London in favour of second defendants (first defendants ' London agents) to secure release of cargo. There was a claim by Yugoslavians to distrain on goods, involving ship in further delay and master of Flora M, on lifting original lien, immediately exercised another lien in respect of extra delay (which was raised when Hungarian buyers put up 2000) Two years later, shipowners claimed arbitration with charterers to assess demurrage for which first lien was exercised and claimed to enforce guarantee. Plaintiff claimed declaration that guarantee was not valid and injunction to restrain shipowners or their agents from enforcing guarantee First and second defendants appealed against granting of injunction by Blain, J. It was held by the Court of Appeal that it was a special case in which the Court should grant an injunction to prevent what might be irretrievable injustice. Lord Denning, M R., observed that although the shippers were not parties to the bank guarantee, nevertheless they had a most imporant interest in it. If the Midland Bank Ltd., paid under this guarantee, they would claim against the Lebanese bank, who in turn would claim against the shippers. The shippers would certainly be debited with the account. On being so debited, they would have to sue the shipowners for breach of their promise express or implied, to release the goods. Lord Denning, M R, further posed the question were the shippers to be forced to take that course? or can they short circuit the dispute by suing the shipowners at once for an injunction? He further observed on page 497 of the Report that this was a special case in which injunction should be granted. Lord Denning, M R. went on to observe that 1136 there was a prima facie ground for saying that, on the telex messages A which passed (and indeed, on the first three lines of the guarantee) the shipowners promised that, if the bank guarantee was given, they would release the goods. He further observed that the only lien they had in mind at that time was the lien for demurrage. But would anyone suppose that the goods would be held for another lien? It can well be argued that the guarantee was given on the understanding that the lien was raised and no further lien imposed, and that when the shipowners, in breach of that understanding imposed a further lien, they were disabled from acting on the guarantee But as mentioned here in before, this was a very special case and I shall notice that Lord Denning, M R. treated this as a very special case and in later decision he expressed his views on this matter. This question was again considered by the Queen s Bench Division by Mr. Justice Kerr in R.D. Harbottle (Mercantile) Ltd. and Another vs National Westminister Bank Ltd. and others, [1977] 2 All England Law Reports 862. In this case injunction was sought on a question in respect of a performance bond. The learned Single Judge Kerr, J. gave the following views: "i) only in exceptional cases would the courts interfere with the machinery of irrevocable obligations assumed by banks. In the case of a confirmed performance guarantee, just as in the case of a confirmed letter of credit, the bank was only concerned to ensure that the terms of its mandate and confirmation had been complied with and was in no way concerned with any contractual disputes which might have arisen between the buyers and sellers. Accordingly, since demands for payment had been made by the buyers under the guarantees and the plaintiffs had not established that the demands were fraudulent or other special circumstances, there were no grounds for continuing the injunctions. "ii) It was right to discharge the injunctions against the bank, the fact that the Egyptian defendants had taken no part in the proceedings could not be a good ground for maintaining those injunctions. Further, equally strong considerations applied in favour of the discharge of the injunctions against the Egyptian defendants, and their failure to participate in the proceedings did not preclude the court from discharging the injunctions against them." 1137 In my opinion the aforesaid represents the correct state of the A law. The Court dealt with three different types of cases which need not be dilated here In Edward Owen Engineering Ltd. vs Barclays Bank International Ltd., [1978] 1 All England Law Reports 1976. English suppliers, entered into a contract with Libyan buyers to supply goods to them in Libya The contract was subject to a condition precedent that the plaintiffs would arrange for a performance bond or guarantee to be given, for ten per cent of the contract price, guaranteeing performance of their obligations under the contract. Accordingly, the plaintiffs instructed the defendants their bankers to give on their behalf a performance guarantee for the sum of pound 50,203. Acting on those instructions the defendants requested a bank in Libya to issue performance bond to the buyers for that sum, and promised the Libyan bank that they would pay the amount of the guarantee on first demand, without any conditions or proof. The Libyan bank issued a letter of guarantee for pound 50,203 to the buyers The contract between the plaintiffs and the buyers provided for payment of the price of the goods supplied by a confirmed letter of credit. The letter of credit opened by the buyers was not a confirmed letter of credit and did not therefore, comply with the contract Because of that non compliance the plaintiffs repudiated the contract. Although it was the buyers who appeared to be in default and not the plaintiffs, the buyers nevertheless claimed on the guarantee given by the Libyan bank who in turn claimed against the defendants on the guarantee they had given The plaintiffs issued a writ against the defendants claiming an injunction to restrain them from paying any sum under the performance guarantee A judge granted the plaintiffs an interim injunction in the terms of the injunction claimed by the writ but subsequently another judge discharged the injunction The plaintiffs appealed to the Court of Appeal in England. It was held by a Bench consisting of Lord Denning M. R., Browne and Geoffrey Lane, LJ that a performance guarantee was similar to a confirmed letter of credit. Where therefore, a bank had given a performance guarantee it was required to honour the guarantee according to its terms and was not concerned whether either party to the contract which underlay the guarantee was in default The only exception to that rule was where fraud by one of the parties to the underlying contract had been established and the bank had notice of the fraud. Accordingly, as the defendants ' guarantee provided for payment on demand without proof or conditions, and was in the nature of a promissory note payable on demand and the plaintiffs had not established fraud on the part of the buyers, the defendants were re 1138 quired to honour their guarantee on the demand made by the Libyan Bank. It followed that the judge had been right to discharge the injunction and that the appeal would be dismissed. Lord Denning, M.R. held that Justice Kerr was right in discharging the injunction and reiterated that the bank must honour its commitment. The principle must be that upon that basis trade and commerce are conducted. Lord Denning, M.R., indicated at page '984 that seeing that the bank must pay, and will probably come down on the English suppliers on their counter guarantee, it followed that the only remedy of the English suppliers was to sue the Libyan customers for damages. The contract contained a clause giving exclusive jurisdiction to the courts of Libya. In the instant case, the learned Judge has proceeded on the basis that this was not an injunction sought against the bank but this was the injunction sought against the appellant But the net effect of the injunction is to restrain the bank from performing the bank guarantee That cannot be done. One cannot do indirectly what one is not free to do directly. But a maltreated man in such circumstances is not remedyless The respondent was not to suffer any injustice which was irretrievable. The respondent can sue the appellant for damages. In this case there cannot be any basis for apprehension that irretrievable damages would be caused if any. I am of the opinion that this is not a case in which injunction should be granted An irrevocable commitment either in the form of confirmed bank guarantee or irrevocable letter of credit cannot be interfered with except in case of fraud or in case of question of apprehension of irretrievable injustice has been made out. This is the well settled principle of the law in England. This is also a well settled principle of law in India, as I shall presently notice from some of the decisions of the High Court and decisions of this Court. In the instant case there was no fraud involved and no question of irretrievable in justice was involved. Before, however, I deal with the decisions of India reference may be made to a decision of the House of Lords in United City Merchants (Investments) Ltd. and others vs Royal Bank of Canada and others, [1982] 2 All England Law Reports 720 where it was reiterated that the whole commercial purpose for which the system of confirmed irrevocable documentary credits had been developed in international trade was to give the seller of goods an assured right to be paid before he 1139 parted with control of the goods without risk of the payment being refused reduced or deferred because of a dispute with the buyer. It followed that the contractual duty owed by an issuing or confirming bank to the buyer to honour the credit notified by him on presentation of apparently conforming documents by the seller was matched by a corresponding contractual liability on the part of the bank to the seller to pay him the amount of the credit on presentation of the documents The bank 's duty to the seller was only vitiated if there was fraud on the part of the seller, and the bank remained under a duty to pay the amount of the credit to the seller even if the documents presented, although conforming on their face with the terms of the credit, nevertheless contained a statement of material fact that was not accurate. These principles must in my opinion apply in case of bank guarantees in internal trade within a country. I may notice that in India, the trend of law is on the same line In the case of Texmaco Ltd. vs State Bank of India and others, A.I.R. 1979 Calcutta 44, one of us (Sabyasachi Mukharji) held that in the absence of special equities arising from a particular situation which might entitle the party on whose behalf guarantee is given to an injunction restraining the bank in performance of bank guarantee and in the absence of any clear fraud, the Bank must pay to the party in whose favour guarantee is given on demand, if so stipulated, and whether the terms are such have to be found out from the performance guarantee as such. There the Court held that where though the guarantee was given for the performance by the party on whose behalf guarantee was given, in an orderly manner its contractual obligation, the obligation was undertaken by the bank to repay the amount on "first demand" and 'without contestation, demur or protest and without reference to such party and without questioning the legal relationship subsisting between the party in whose favour guarantee was given and the party on whose behalf guarantee was given," and the guarantee also stipulated that the bank should forthwith pay the amount due notwithstanding any dispute between the parties," it must be deemed that the moment a demand was made without protest and contestation, the bank had obliged itself to pay irrespective of any dispute as to whether there had been performance in an orderly manner of the contractual obligation by the party. Consequently, in such a case, the party on whose behalf guarantee was given was not entitled to an injunction restraining the bank in performance of its guarantee It appears that special equities mentioned therein may be a situation where the injunction was sought for to prevent injustice which was irretrievable in the words of Lord Justice Danckwerts in Elian and 1140 Rabbath (Trading as Elian & Rabbath) vs Matsas and Matsas & Ors. (supra). The same view was more or less expressed by the High Court of Calcutta in its decision in the case of State Bank of India vs The Economic Trading Co. S.A.A. and others, A.I.R. 1975 Calcutta 145. See also a decision in the case of B.S. Aujla Company Pvt. Ltd. vs Kaluram Mahadeo Prosad and others, A. I . 1983 Calcutta 106. In the instant case I have emphasised the terms of the Bank guarantee. Our attention was drawn to Bench decision of the Allahabad High Court in the case of Union of India and others vs Meena Steels Ltd. and Another, AIR 1985 Allahabad 282. There a suit by a company was filed restraining Railways to encash bank guarantee. In that suit application was made for temporary injunction. The Court was of the view that the matter would still be referred to arbitration and in those circumstances if bank guarantees were permitted to be encashed, if would be improper. I am however, unable to sustain this view, in view of the well settled principle on which bank guarantees are operated. Our attention was also drawn to the judgment of the learned single Judge of the Madras High Court in Arul Murugan Traders vs Rashtriya Chemicals and Fertilizers Ltd. Bombay and another, A.I.R. 1986 Madras 161 where the learned Single Judge expressed the opinion that there was no absolute rule prohibiting grant of interim injunction relating to Bank guarantees and in exceptional case courts would interfere with the machinery of irrevocable obligations assumed by banks, and that the plaintiff must establish prima facie case, meaning thereby that there is a bona fide contention between the parties or serious question to be tried and further the balance of convenience was also a relevant factor. If the element of fraud exists, then courts step in to prevent one of the parties to the contract from deriving unjust enrichment by invoking bank guarantee. In that case the learned Single Judge came to the conclusion that the suit involved serious questions to be tried and particularly relating to the plea of fraud, which was a significant factor to be taken into account and claim for interdicting the enforcement of bank guarantee should have been allowed. I am however, of the opinion that these observations must be strictly considered in the light of the principle enunciated. It is not the decision that there should be a prima facie case. In order to restrain 1141 the operation either of irrevocable letter of credit or of confirmed letter of credit or of bank guarantee, there should be serious dispute and there should be good prima facie case of fraud and special equities in the form of preventing irretrievable injustice between the parties. Otherwise the very purpose of bank guarantees would be negatived and the fabric of trading operation will get jeopardised. In Tarapore & Co. Madras vs M/s V/o Tractors Export, Moscow and Anr. [1969] 2 S R 920 this Court observed that irrevocable letter of credit had a definite implication. It was independent of and unqualified by the contract of sale or other underlying transactions. It was a machanism of great importance in international trade and any interference with that mechanism was bound to have serious repercussions on the international trade of this country The Court reiterated that the autonomy of an irrevocable letter of credit was entitled to protection and except in very exceptional circumstances courts should not interfere with that autonomy These observations a fortiori apply to a bank guarantee because upon bank guarantee revolves many of the internal trade and transactions in a country. In United Commercial Bank vs Bank of India and others; , , this Court was dealing with injunction restraining the bank in respect of letter of credit. This Court observed that the High Court was wrong in granting the temporary injunction restraining the appellant bank from recalling the amount paid to the respondent bank. This Court reiterated that Courts usually refrain from granting injunction to restrain the performance of the contractual obligations arising out of a letter of credit, or a bank guarantee between one bank and another. If such temporary injunction were to be granted in a transaction between a banker and a banker, restraining a bank from recalling the amount due when payment was made under reserve to another bank or in terms of the letter of guarantee or credit executed by it the whole banking system in the country would fail The Court however, observed that the opening of a confirmed letter of credit constituted a bargain between the banker and the seller of the goods which imposed on the banker an absolute obligation to pay. The banker was not bound or entitled to honour the bills of exchange drawn by the seller unless they and such accompanying documents as might be required thereunder, were in exact compliance with the terms of the credit. This principle was again reiterated by this Court in Centax 1142 (India) Ltd. vs Vinmar Impex Inc. and others, A where the appellant entered into a contract with the respondent company of Singapore for supply of certain goods to it. The Contract, inter alia stipulated that the bills of lading should mention 'shipping mark 5202 '. Pursuant to the contract, at the request of the appellant the Allahabad Bank opened a letter of credit, it favour of the respondent. The respondent thereupon despatched the goods covered by the bills of lading This Court was concerned with the bank guarantee and referred to the previous decision of this Court in United Commercial Bank vs Bank of India and others, (supra). This Court found that this case was covered. The Court observed that the Court should not, in transaction between a banker and banker, grant an injunction at the instance of the beneficiary of an irrevocable letter of credit, restraining the issuing bank from recalling the amount paid under reserve from the negotiating bank, acting on behalf of the beneficiary against a document of guarantee, indemnity at the instance of the beneficiary On the basis of these principles I reiterate that commitments of banks must be honoured free from interference by the courts. Otherwise, trust in commerce internal and international would be irreparably damaged. It is only in exceptional cases that is to say in case of fraud or in case of irretrievable injustice be done, the Court should interfere. Mr. Tarkunde submitted before us that in this case the grievance of the appellant was that there was delay in performance and defective machinery had been supplied. He submitted that if at this stage appellant was allowed to enforce the bank guarantee, damage would be done. He submitted before us that appellant could not be permitted to take advantage of illegality by invoking the bank guarantee. But in my opinion these contentions cannot deter us in view of the principle well settled that there should not be interference in trade. This is not a case where irretrievable injustice would be done by enforcement of bank guarantee. This is also not a case where a strong prima facie case of fraud in entering into a transaction was made out. If that is the position, then the High Court should not have interfered with the bank guarantee. In the aforesaid view of the matter, this appeal must be allowed The Judgment and order or the Allahabad High Court dated 20 2.87 must be set aside and the order of the learned civil Judge Lucknow dated 8.8 86 restored. 1143 In the facts and circumstances of the case parties will bear their own costs of this appeal. JAGANNATHA SHETTY, J. l agree respectfully with the judgment of my learned brother Sabyasachi Mukherji, J. I wish, however, to draw attention to some of the aspects of the matter to which I attach importance. The crux of the matter relates to the obligation assumed by the bank under a performance guarantee. Whether the obligation is similar to the one arising under a letter of credit? Whether the Court could interfere in regard to such obligation, and if so, under what circumstances? These are the questions raised in this appeal. The facts which are relevant for my purpose are these: On May 17, 1983, M/s. Singh Consultants & Engineers (Pvt.) Ltd. ("SCE (P) Ltd.") entered into a contract with U.P. Cooperative Federation Ltd. ("UPCOF Ltd.") for constructing a Vanaspati manufacturing plant at Haldpur, District Nainital, U.P. The contract required that UPCOF Ltd. should be given two bank guarantees for proper construction and successful commissioning of the plant. In accordance with the terms of the contract,the Bank of India gave two guarantees in favour of UPCOF Ltd., one for Rs.16,50,000 and another for Rs.33,00,000. These contain similar terms and conditions. Thereunder, the bank has undertaken not to revoke the guarantee in any event before the expiry of the due date. The Bank has also undertaken to make unconditional payments on demand. without reference to SCE (P) Ltd. The guarantee also provides that the UPCOF Ltd. was the sole judge for deciding whether SCE(P) Ltd. has fulfilled the terms of the contract or not. The guarantee was thus undisputedly irrevocable with absolute discretion for UPCOF Ltd. to invoke the same. The dispute arose between the parties as to the erection and performance of the plant. The SCE(P) Ltd. apprehending that the bank guarantees would be invoked by the UPCOF Ltd, approached the Court of the Civil Judge, Lucknow for a restraint order against the latter. The action was brought under Sec. 41 of the read with order 39 r. 1 and 2 of the Code of Civil Procedure contending inter alia, that there was no default in the construction or delivery of possession of the plant. But the UPCOF Ltd. had a different version. It contended that the construction was not within the time schedule and performance of the plant was not up to the mark. It also 1144 contended that the Court should not grant injunction in the matter. The trial court refused to interdict UPCOF Ltd. the SCE(P) Ltd. took up the matter in revision before Lucknow Bench of the Allahabad High Court. The learned Judge before whom the matter came up for disposal was of the view that SCE(P) Ltd. has made out a prima facie case . It has prima facie proved that the plant was delivered after a trial run and commercial production had started. So stating, learned Judge allowed the revision and granted the relief sought for. The UPCOF Ltd. was restrained from invoking the bank guarantees. The learned Judge, however, issued a direction to SCE(P) Ltd. to keep alive the bank guarantees during the pendency of the arbitration proceedings. The UPCOF Ltd. by special leave has come up before this Court challenging the validity of the order of the High Court. The Primary question for consideration is whether the High Court was justified in restraining the appellant from invoking the Bank guarantees? The submission of Mr. A.B. Diwan learned counsel for the appellant rested on the law governing the irrevocable letter of credit where courts keep themselves away from the liability assumed by the banks. In support of the submission, the counsel strongly relied upon the two decisions of this Court: (i) United Commercial Bank vs Bank of India & Ors., ; and (ii) Centax (India) Ltd. vs Vinmar Impex Inc. & Ors. Mr. V.M. Tarkunde, learned counsel for the respondent or the other hand, urged that both the said decisions are not relevant since the present case concerns with rights and obligations of parties under a construction contract. The rights under the contract in question are justiciable in the Court of law. The performance guarantee given by the Bank flows from the terms of the construction contract. But the issues to be determined in the suit do not relate to the obligations of the bank under the guarantees given and the bank is also not a party to the suit. The counsel further urged that the respondent has established a prima facie case to justify the grant of injunction and this Court should not interfere with the discretionary relief granted. The argument for the respondent is attractive but it seems to overlook the basic nature of the case. The basic nature of the case relates to the obligations assumed by the bank under the guarantees given to UPCOF Ltd. If under law, the bank cannot be prevented by SCE(P) Ltd from honouring the credit guarantees, the UPCOF Ltd. also cannot be restrained from invoking the guarantees. What applies 1145 to the bank must equally apply to UPCOF Ltd. Therefore, the frame of the suit by not impleading the bank cannot make any difference in the position of law. Equally, it would he futile to contend that the court was justified in granting the injunction since it has found a prima facie case in favour of the SCE(P) Ltd. The question of examining the prima facie case or balance of convenience does not arise if the court cannot interfere with the unconditional commitment made by the bank in the guarantees in question. The modern documentary credit had its origin from letters of credit. We may, therefore, begin the discussion with the traditional letter of credit. Paul R. Verkuil in an article [Bank Solvency and Guaranty Letters of Credit, Standford Law Review V. 25 (1972 73 at p. 719)] explains the salient features of a letter of credit in these terms: C "The letter of credit is a contract. The issuing party usually a bank promises to pay the 'beneficiary ' traditionally a seller of goods on demand if the beneficiary presents whatever documents may be required by the letter. They are normally the only two parties involved in the contract. The bank which issues a letter of credit acts as a principal, not as agent for its customer, and engages its own credit. The letter of credit thus 'evidences irrevocable obligation to honour the draft presented by the beneficiary upon compliance with the terms of the credit. " The letter of credit has been developed over hundreds of years of international trade. It was most commonly used in conjunction with the sale of goods between geographically distant parties. It was intended to facilitate the transfer of goods between distant and unfamiliar buyer and seller. It was found difficult for the seller to rely upon the credit of an unknown customer. It was also found difficult for a buyer to pay for goods prior to their delivery. The bank 's letter of credit came into existence to bridge this gap. In such transactions, the seller (beneficiary) receives payment from issuing bank when he presents a demand as per terms of the documents. The bank must pay if the documents are in order and the terms of credit are satisfied. The bank, however, was not allowed to determine whether the seller had actually shipped the goods or whether the goods conformed to the requirements of the contract. Any dispute between the buyer and the seller must be settled between themselves. The Courts, however, carved out an exception to this rule of absolute independence. The Courts held that if there has been "fraud in the transaction 1146 the bank could dishonour beneficiary 's demand for payment. The A Courts have generally permitted dishonour only on the fraud of the beneficiary, not the fraud of somebody else. It was perhaps for the first time the said exception of fraud to the rule of absolute independence of the letter of credit has been applied by Shientag, J. in the American case of Sztejn vs J. Henry Schroder Banking Corporation, Mr. Sztejn wanted to buy some bristles from India and so he entered into a deal with an Indian seller to sell him a quantity. The issuing bank issued a letter of credit to the Indian seller that provided that, upon receipt of appropriate documents, the bank would pay for the shipment. Somehow Mr. Sztejn discovered that the shipment made was not crates of bristles, but crates of worthless material and rubbish. He went to his bank which probably informed him that the letter of credit was an independent undertaking of the bank and it must pay. Mr. Sztejn did not take that sitting down. He went to court and he sought an injunction. Now in 1941 people just did not get injunctions against payment under letters of credit. The defendant bank, against its customer, filed the equivalent of a motion to dismiss for failure to state a claim. In that posture all the allegations of the complaint were taken as true, and those allegations were gross fraud that the holders in due course were involved. On those facts, the court issued an injunction against payment. The exception of fraud created in the above case has been codified in sec. 5 114 of the Uniform Commercial Code. It has been accepted by Courts in England. See: (i) Hamzeb Milas and Sons vs British Lmex Industries Ltd. , (ii) R.D. Harbottle (Mercantile) Ltd. and another vs National West Minister Bank Ltd. ; (iii) Edward Owen Engineering Ltd. vs Barclays Bank International Ltd., [1978] l All E.R. 976 and (iv) UCM (Investment) vs Royal Bank of India, The last case is of the House of Lords where Lord Diplock in his speech said (at p. 725): "The whole commercial purpose for which the system of confirmed irrevocable documentary credits has been developed in international trade is to give to the seller an assured right to be paid before he parts with control of the goods and that does not permit of the any dispute with the buyer as to the performance of the contract of sale being used as a ground for non payment or reduction or deferment of payment. 1147 "To this general statement of principle as to the contractual obligations of the confirming bank to the seller, there is one established exception: that is, where the seller, for the purpose of drawing on the credit, fradulently presents to the confirming bank documents that contain, expressly or by implication, material representations of fact that to his knowledge are untrue. Although there does not appear among the English authorities any case in which this exception has been applied, it is well established in the American cases, of which the leading or 'landmark ' case is Sztejn vs Henry Schroder Banking Corp., [ 1941] 3 1. This judgment of the New York Court of Appeals was referred to with approval by the English Court of Appeal in Edward Owen Engineering Ltd. vs Barclays Bank International Ltd. [1978] 1 All E.R. 979 though this was actually a case about a performance bond under which a bank assumes obligation to a buyer analogous to those assumed by a confirming bank to the seller under a documentary credit. The exception for fraud on the part of the beneficiary seeking to avail himself of the credit is a clear application to the maxim ex trupi cause non oritur actio or if plain English is to be preferred, 'fraud unravels all ', the courts will not allow their process to be used by a dishonest person to carry out a fraud. " This was also the view taken by this Court in United Commercial Bank case ; There A.P. Sen, J. speaking for the Court, said (pages 323 and 324): "The rule is well established that a bank issuing or confirming a letter of credit is not concerned with the underlying contract between the buyer and seller. Duties of a bank under a letter of credit are created by the document itself, but in any case it has the power and is subject to the limitations which are given or imposed by it, in the absence of the appropriate provisions in the letter of credit. "It is somewhat unfortunate that the High Court should have granted a temporary injunction, as it has been done in this case, to restrain the appellant from making a recall of the amount of Rs.85,84,456 from the Bank of India in terms of the letter of guarantee or indemnity executed by it. The courts usually refrain from granting injunction to 1148 restrain the performance of the contractual obligations arising out of a letter of credit or a bank guarantee between one bank and another. If such temporary injunctions were to be granted in a transaction between a banker and a banker, restraining a bank from recalling the amount due when payment is made under reserve to another bank or in terms of the letter of guarantee or credit executed by it, the whole banking system in the country would fail. "In view of the banker 's obligation under an irrevocable letter of credit to pay, his buyer customer cannot instruct him not to pay. " In Centax (India) Ltd., , this Court again speaking through A.P. Sen, J. following the decision in the United Commercial Bank case said: "We do not see why the same principles should not apply to a banker 's letter of indemnity. " It is true that both the decisions of this Court dealt with a contract to sell specific commodities or a transaction of sale of goods with an irrevocable letter of credit. But in modern commercial transactions, various devices are used to ensure performance by the contracting parties. The traditional letter of credit has taken a new meaning. In business circles, standby letters of credit are also used. Performance bond and guarantee bond are also the devices increasingly adopted in transactions. The Courts have treated such documents as analogous to letter of cedit. A case involving the obligations under a performance guarantee was considered by the Court of Appeal in Edward Owen Engineering Ltd. vs Barclay 's Bank International Ltd., The facts in that case are these: English sellers entered into a contract to supply and erect glass houses in Libya. The Libyan buyers were to open an irrevocable letter of credit in favour of the sellers. The sellers told their English bank to give a performance guarantee. The English bank instructed a Libyan bank to issue a performance bond in favour of the buyers for a certain sum and gave their guarantee payable on demand without proof or conditions to cover that sum. The Libyan bank issued a bond accordingly. The sellers received no confirmed letter of credit and refused to proceed with the contract. The sellers obtained in interim injunction to prevent the English bank from paying on the guarantee. On appeal Lord Denning M.R. said: 1149 "So as on takes instance after instance these performance guarantees are virtually promissory notes payable on demand. So long as the Libyan customers make an honest demand, the banks are bound to pay and the banks will rarely, if ever, be in a position to know whether the demand is honest or not. At any rate they will not be able to prove it to be dishonest. So these will have to pay. " And said: "All this leads to the conclusion that the performance guarantee stands on a similar footing to a letter of credit. A bank which gives a performance guarantee must honour that guarantee according to its terms. It is not concerned in the least with the relations between the supplier and the customer: nor with question whether the supplier has performed his contractual obligation or not; nor with the question whether supplier is in default or not. The bank must pay according to its guarantees, on demand if so stipulated, without proof or conditions. The only exception is when there is a clear fraud of which the bank has noticed. " Whether it is a traditional letter of credit or a new device like performance bond or performance guarantee, the obligation of banks appears to be the same. If the documentary credits are irrevocable and independent, the banks must pay when demand is made. Since the bank pledges its own credit involving its reputation, it has no defence except in the case of fraud. The bank 's obligations of course should not be extended to protect the unscrupulous seller, that is the seller who is responsible for the fraud. But, the banker must be sure of his ground before declining to pay. The nature of the fraud that the Courts talk about is fraud of an "egregious nature as to vitiate the entire underlying transaction". It is fraud of the beneficiary, not the fraud of somebody else. If the bank detects with a minimal investigation the fraudulent action of the seller, the payment could be refused. The bank cannot be compelled to honour the credit in such cases. But it may be very difficult for the bank to take a decision on the alleged fraudulent action. In such cases, it would be proper for the bank to ask the buyer to approach the Court for an injunction. The Court, however, should not lightly interfere with the operation of irrevocable documentary credit. I agree with my learned 1150 brother that in order to restrain the operation of irrevocable letter of credit, performance bond or guarantee, there should be serious dispute to be tried and there should be a good prima facie acts of fraud. As Sir John Donaldson M.R. said in Bolivinter oil SA vs Chase Mannattan Bank & ors. 1 at 352: "The wholly exceptional case where an injunction may be granted is where it is proved that the bank knows that any demand for payment already made or which may thereafter be made will clearly be fraudulent. But the evidence must be clear both as to the fact of fraud and as to the bank 's knowledge. It would certainly not normally be sufficient that this rests on the uncorroborated statement of the customer, for irreparable damage can be done to a bank 's credit in the relatively brief time which must elapse between the granting of such an injunction and an application by the bank to have it discharged. " From the above discussion, what appears to me is this: The sound banking system may, however, require more caution in the issuance of irrevocable documentary credits. It would be for the banks to safeguard themselves by other means and generally not for the court to come to their rescue with injunctions unless there is established fraud. In the result, this appeal must be allowed. The judgment and order of the Allahabad High Court dated February 20, 1987 must be set aside and the order of learned Civil Judge, Lucknow dated August 8, 1986 restored. S.L. Appeal allowed.

% The appellant, a State Government enterprise, on or about May 17, 1983, entered into a contract with the respondent, a private limited company, for the supply and installation of a vanaspati manufacturing plant at a place in the district of Nainital. The contract bond contemplated guaranteed performance of the work at various stages in accordance with the time schedule prescribed and provided for completion and commissioning of the plant after trial run by May 15, 1984. According to the appellant, the time was essentially and indisputably the essence of the contract. As per the terms and conditions of the contract bond, according to the appellant, the respondent was to furnish a performance bank guarantee for Rs.16.5 lakhs and yet another bank guarantee for Rs.33 lakhs as security for the monies advanced by the appellant to the respondent for undertaking the work. Both these guarantees as also the contract bond entitled the appellant to invoke them and call for their realisation and encashment on the failure of the respondent to perform the obligations for which the appellant was made the sole judge. It was alleged that the respondent defaulted at various stages and finally failed to complete the work within the stipulated time. The appellant invoked the two guarantees one after the other, and thereafter proceeded to have the plant completed, etc. According to the appellant, the plant could actually be commissioned for commercial production in July/August, 1985. The respondent, on August 4, 1986, filed an application under section 41 of the (The Act) in the court of the Civil Judge, praying for an injunction restraining the appellant from realis 1125 ing and encashing the bank guarantees. The Civil Judge dismissed the application. The respondent filed a revision petition before the High Court, which allowed the same, holding that the invocation of the performance guarantees was illegal, and the contentions of the appellant that the performance guarantees constituted independent and separate contracts between the guarantor bank and the beneficiary and created independent rights, liabilities and obligations under the guarantee bonds themselves, as being "technical pleas". The High Court, however, directed the respondent to keep alive the bank guarantee during the pendency of the arbitration proceedings. The appellant then moved this Court for relief by special leave. Allowing the appeal, The Court, ^ HELD: Per Sabyasachi Mukharji, J. Under the terms agreed to between the parties, there is no scope of injunction. The High Court proceeded on the basis that this was not an injunction sought against the bank but against the appellant. But the net effect of the injunction is to restrain the bank from performing the bank guarantee. That cannot be done. One cannot do indirectly what one is not free to do directly. The respondent was not to suffer any injustice which was irretrievable. The respondent can sue the appellant for damages. There cannot be any basis in the case for apprehension that irretrievable damage would be caused, if any. His Lordship was of the opinion that this was not a case in which injunction should be granted. An irrevocable commitment either in the form of confirmed bank guarantee or irrevocable letter of credit cannot be interfered with except if a case of fraud or a case of a question of apprehension of irretrievable injustice has been made out. This is the well settled principle of the law in England. This is also the well settled principle of law in India. No fraud and no question of irretrievable injustice was involved in the case. [1138C F] In order to restrain the operation either of irrevocable letter of credit or of confirmed letter of credit or of bank guarantee, there should be a serious dispute and a good prima facie case of fraud and special equities in the form of preventing irretrievable injustice between the parties; otherwise, the very purpose of bank guarantees would be negatived and the fabric of trading operation would be jeopardised. The commitments of the banks must be honoured free from interference by the courts; otherwise, trust in commerce internal and international would be irreparably damaged. It is only in exceptional cases, that is, in 1126 cases of fraud or in cases of irretrievable injustice that the court should interfere. This is not a case where irretrievable injustice would be done by enforcement of the bank guarantee. This is also not a case where a strong prima facie case of fraud in entering into a transaction was made out. The High Court should not have interfered with the bank guarantee. The judgment and order of the High Court set aside. The order of the Civil Judge restored.[1141A B; 1142D H] Per K. Jagannatha Shetty, J. (concurring): The crux of the matter relates to the obligation assumed by the bank under a performance guarantee. [1143B] Whether the obligation is similar to the one arising under a letter of credit? Whether the Court could interfere in regard to such obligation, and if so, under what circumstances? These are the questions raised in the appeal. [1143B C] The primary question for consideration is whether the High Court was justified in restraining the appellant from invoking the bank guarantees. The basic nature of the case relates to the obligations assumed by the bank under the guarantees given to the appellant. If under the law, the bank cannot be prevented by the respondent from honouring the credit guarantees, the appellant also cannot be restrained from invoking the guarantees. What applies to the bank must equally apply to the appellant. Therefore, the frame of the suit by not impleading the bank cannot make any difference in the position of law. Equally, it would be futile to contend that the court was justified in granting the injunction since it has found a prima facie case in favour of the respondent. The question of examining the prima facie case or balance of convenience does not arise if the court cannot interfere with the unconditional commitment made by the bank in the guarantees in question. [1144C D; 1145A B] The modern documentary credit had its origin from letters of credit. The letter of credit has developed over hundreds of years of international trade. It was intended to facilitate the transfer of goods between distant and unfamiliar buyer and seller. It was found difficult for a buyer to pay for goods prior to their delivery. The bank 's letter of credit came to bridge this gap. In such transactions, the seller (beneficiary) receives payment from the issuing bank when he presents a demand as per the terms of the documents. The bank must pay if the documents are in order and the terms of credit are satisfied. The bank, 1127 however, was not allowed to determine whether the seller had actually shipped the goods or whether the goods conformed to the requirements of the contract. Any dispute between the seller and the buyer must be settled between themselves. The Courts, however, in carving out an exception to this rule of absolute independence, held that if there has been a "fraud in the transaction", the bank could dishonour beneficiary 's demand for payment. The Courts have generally permitted dishonour only on the fraud of the beneficiary, not the fraud of somebody else. [1145C, E H; 1146A] In modern commercial transactions, various devices are used to ensure performance by the contracting parties. The traditional letter of credit has taken a new meaning. Stand by letters of credit are also used in business circles. Performance bond and guarantee bond are also devices increasingly adopted in transactions. The Courts have treated ch documents as analogous to letter of credit. l 1148E] Whether it is a traditional letter of credit or a new device, like performance bond or performance guarantee, the obligation of the bank appears to be the same. Since the bank pledges its own credit, involving its reputation, it has no defence except in the case of fraud. The nature of the fraud that the courts talk about is the fraud of an 'egregious nature as to vitiate the entire underlying transaction". It is the fraud of the beneficiary, not fraud of somebody else. The bank cannot be compelled to honour the credit in such cases. In such cases, it would be proper for the bank to ask the buyer to approach the court for an injunction. The court, however, should not lightly interfere with the operation of irrevocable documentary credit. In order to restrain the operation of irrevocable letter of credit, performance bond or guarantee, there should be a serious dispute to be tried and there should be a good prima Facie act of fraud . [1149E H; 1150A] The sound banking system may, however, require more caution in the issuance of irrevocable documentary credit. It would be for the banks to safeguard themselves by other means, and, generally, not for the courts to come to their rescue with injunctions unless there is established fraud. The appeal must be allowed, and the order of the civil judge, restored. [1150D E] Hamzeh Melas & Sons vs British Imex Industries Ltd., ; Elian and Rabbath (Trading as Elian & Rabbath vs Mastas and Mastas & ors., [1966] 2 Lloyd 's List Law Reports 495; R.D. Harbottle (Mercantile) Ltd. and Another vs Nahonal Westminster 1128 Bank Ltd. and Ors., [1977] 2 All England Law Reports 862; Edward owen Engineering Ltd. vs Barclays Bank International Ltd, [1978] 1 All England Law Reports 976; United City Merchants (Investments) Ltd. & Ors. vs Royal Bank of Canada vs State Bank of India & Ors. AIR 1979 Calcutta 44; State Bank of India v; The Economic Trading Co. S.A.A. & ors., AIR 1975 Calcutta 145; B.S. Auila Company Pvt. Ltd. vs Kaluram Mahadeo Prasad & Ors., ; Union of India & ors. vs Meena Steels Ltd. & Another, AIR 1985 Allahabad 282; Arul Murugan Traders vs Rashtriya Chemicals & Fertilizers Ltd. Bombay and another, AIR 1986 Madras 161; Tarapore & Co. Madras vs M/s. V/o Tractors Export, Moscow & Anr., ; ; United Commercial Bank vs Bank of India & ors. ; , ; Centax (India) Ltd. vs Vinmar Impex Inc. and others, ; United Commercial Bank vs Bank of India & Ors., ; and Bolivinter oil SA vs Chase Mannettan Bank & Ors. , at 352, referred to.

ivil Appeal No. 357 of 1957. Appeal by special leave from the judgment and order dated February 28, 1956, of the Allahabad High Court (Lucknow Bench) in Misc. Case No. 4 of 1955 and Civil Revision No. 189 of 1955, arising out of the order dated August 6, 1955 of the Civil Judge, Sitapur in Suit No. 16 of 1953. Vidya Sagar, for the appellant. Iqbal Ahmad, section N. Andley and Rameshwar Nath, for the respondent. January 22. The following Judgment of the Court was delivered by SARKAR J. The respondent, a scheduled bank, sued the appellant in the court of the Civil Judge, Sitapore in Uttar Pradesh, for the recovery of money due under an instrument of mortgage. The appellant contested the suit on several grounds one of which was that he was entitled to relief under the Uttar Pradesh Zamindar 's Debt Reduction Act (U.P. XV of 1953) which reduced the amount recoverable on a debt as defined in it. Now a debt was defined in the Act in these terms: 2(f): "debt" means an advance in cash or in kind and includes any transaction which is in substance a debt but does not include an advance as aforesaid made on or after the first day of July, 1952 or a debt due to (i) the Central Government or Government of any State ; (ii) a local authority; (iii) a scheduled bank; (iv) a co operative society; and 1152 (v) a waqf, trust or endowment for a charitable or religious purpose only. (vi) a person, where the debt was advanced on his behalf by the Court of Wards to a ward. As the respondent was a scheduled bank the debt due to it from the appellant was not a debt within this definition and consequently, no relief would appear to be available to the appellant under the Act in respect of that debt. The appellant, however, contended that the definition in so far as it excluded certain debts offended article 14 of the Constitution in as much as it made an arbitrary distinction between several classes of debtors and denied the excluded debtors, the equal protection of the law and that hence that portion of the definition which excluded certain debts was invalid and should be struck out and the rest of the definition should be left as operative. If the appellant 's contention was justified, the definition would have to run as follows: "debt" means an advance in cash or in coin and includes any transaction which is in substance a debt, and would then include the debt due by the appellant to the respondent. If this was the correct position, then the appellant would be entitled to all the reliefs granted by the Act. This defence, therefore, raised a question as to the validity of a provision in the Act. So the appellant made an application to the Civil Judge, Sitapur, under the proviso to section 113 of the Code of Civil Procedure asking him to state a case for the opinion of the High Court at Allahabad to which he was subordinate as to the invalidity of the impugned portion of the definition. That proviso is in these terms: Provided that where the Court is satisfied that a case pending before it involves a question as to the validity of any Act, Ordinance or Regulation or of any provision contained in an Act, Ordinance or Regulation, the determination of which is necessary for the disposal of the case, and is of opinion that such Act, Ordinance, Regulation or provision is invalid or inoperative, but has not been so declared by 1153 the High Court to which that Court is subordinate or by the Supreme Court, the Court shall state a case setting out its opinion and the reasons therefor, and refer the same for the opinion of the High Court. The learned Civil Judge took the view that the impugned portion of the definition infringed article 14 of the Constitution as it made an arbitrary distinction between several classes of debtors and was therefore invalid, but he held that it was not necessary for the disposal of the case to decide such question of invalidity because even if it was decided in favour of the appellant, the result would be to exclude the entire definition from the Act as the offending portion was not severable from the rest and the appellant would, therefore, be in any event left without the protection of the Act. In this view of the matter he held that the proviso to section 113 of the Code did not apply and dismissed the application under it. The appellant then made an application to the High Court at Allahabad for a revision of the order of the learned Civil Judge. He at the same time made another application to the High Court under article 228 of the Constitution. That article is in these terms: If the High Court is satisfied that a case pending in a court subordinate to it involves a substantial question of law as to the interpretation of this Constitution the determination of which is necessary for the disposal of the case, it shall withdraw the case and may (a) either dispose of the case itself, or (b) determine the said question of law and return the case to the court from which the case has been so withdrawn together with a copy of its judgment on such question, and the said court shall on receipt thereof proceed to dispose of the case in conformity with such judgment. The appellant in the latter application prayed that the High Court might be pleased to withdraw the case and either dispose it of itself, or determine the question of the validity of the defintion of debt in the Act and return the case to the court of the Civil Judge, 1154 Sitapur, for final disposal in accordance with such determination. The High Court disposed of both the applications by one judgment. It held that there was no dispute as to the constitutional principle which was clear, namely, that every citizen was entitled to the equal protection of the laws and that any enactment which infringed that principle, is to that extent void, and that the only dispute was whether the impugned portion of the definition of a " debt " in the Act was severable from the rest and that was not a question of the interpretation of any provision of the Constitution but one of the construction of the Act itself. The High Court also held that even if any question of the interpretation of the Constitution arose, a determination of that question was not necessary for the dispogal of the case. In this view of the matter the High Court dismissed the application in revision and also that under article 228. From this judgment the present appeal has been filed. It seems clear to us that the question raised by the appellant in this case comes within the proviso to section 113 of the Code as also article 228 of the Constitution. The question contemplated by the proviso to section 113 of the Code is as to the validity of an Act or of a provision in it while article 228 of the Constitution has in view a question as to the interpretation of the Constitution. Now the question raised in the present case is as to the validity of a provision in the Zamindar 's Debt Reduction Act. This question is, however, also a question as to the interpretation of the Constitution, for the validity of the provision is challenged on the ground that it contravenes an article of the Constitution. The point that really arises in this appeal is whether it is necessary for the disposal of the case to decide the question of the validity of a portion of the definition of a debt in the Act . All other conditions necessary for an order being made under the proviso to section 113 of the Code or article 228 of the Constitution exist and as to this there is no serious dispute. It is 1155 not necessary for us therefore to discuss these conditions. The courts below held that in either view of the question of the validity of the impugned portion of the definition of a debt, the appellant would be without, the remedy which he sought, because that portion of the definition was not severable from the rest, and therefore it was not necessary to decide that question to dispose of the case. We are unable to agree with this view. The question of the validity of the definition in so far as it excluded certain debts having been raised and pressed by the appellant, it had to be decided by the court. Without a decision of that question the case could not be disposed of. The fact that in the view of the court the impugned part of the% definition was not severable from the rest and there ' fore in any view of the question as to the validity of the impugned part, the appellant would not get any relief, did not alter the position. The question as to the severability of the impugned part of the definition from the rest would arise only after it had been decided that the impugned part was invalid and so to be able to say that the impugned part of the definition was not severable from the rest, it had first to be held that that part was invalid. It could not be said that as the impugned part was not severable from the rest it was not necessary for the disposal of the case to decide the question of the validity of the impugned part. We, therefore, hold that it is necessary to decide the question of the validity of the impugned part of the definition to dispose of the case. This appeal is hence allowed. The High Court will withdraw the case and either dispose it of itself or determine the question of the validity of the definition of a debt in the Zamindar 's Debt Reduction Act and return the case to the Civil Judge, Sitapur, for disposal in accordance with its determination of the ' question. The appellant will get the costs of this appeal. Appeal allowed.

The respondent, a scheduled bank, sued the appellant for recovery of money under a mortgage. The appellant claimed reduction of the debt under the Uttar Pradesh Zamindari Debt Reduction Act, 1953. An advance or debt due to a scheduled bank was excluded from the definition of "debt" given in the Act. The appellant contended that the definition in so far as it excluded certain debts offended article 14 Of the Constitution as it made an arbitrary distinction between several classes of debtors. The appellant applied to the court under the proviso to section 113 of the Code of Civil Procedure praying that a case be stated for the opinion of the High Court as to the validity of the impugned portion of the definition. The Court rejected the application. The appellant made an application in revision to the High Court and also an application under article 228 of the Constitution for withdrawing the case for a decision of the question of the validity of the definition. The High Court dismissed the applications. The Courts below held that in either view of the question as to the validity of the impugned portion of the definition, the appellant would be left without the remedy which he sought, because that portion of the definition was not severable from the rest and the whole definition would have to be excluded and therefore it was not necessary to decide that question to dispose of the case 1151 Held, that the question raised by the appellant came both within the proviso to section 113 of the Code and article 228 Of the Constitution. The question whether the impugned part of the definition contravened article 14 was a question as to the interpretation of the Constitution and that question must be decided first. The question of severability could arise only after that question had been decided and the impugned part held invalid.

ition (Criminal) No.668 of 1986. (Under Article 32 of the Constitution of India). R.K. Jain and R.P. Singh for the Petitioner. C.V.S. Rao for the Respondents. The Judgment of the Court was delivered by B.C. RAY, J. The petitioner who was aged about 18 years along with one Subeh Singh was involved in a case of murder of one Ranbir Singh and he was convicted for an offence U s 302 34 I.P.C. and sentenced to life imprisonment by judgment and order dated 22nd May, 1980. The petitioner being admit tedly below 21 years of age at the time of alleged commis sion offence was sent to Borstal Institution in accordance with the provisions of Punjab Borstal Act, 1926. It has been stated that the petitioner has already undergone a period of about 6 years, 10 months and 11 days detention in jail and together with remissions earned by him it comes to over 10 years. It has been further stated that he is entitled to be released both under the Punjab Borstal Act as well as under paragraph 5 16 B of the Punjab Jail Manual and has therefore prayed for his pre mature release as provided under the Punjab Borstal Act and also under paragraph 5 16 B of the Punjab Jail Manual. In the counter affidavit filed on behalf of the respondent sworn by one Shri Ram Chander Sarwan, Superintendent of District Jail at Rohtak it has been stated that the petitioner was convicted and sentenced to life imprisonment U,S 30234 I.P.C. on 22.5. 1980 by the Sessions Judge, Rohtak and he was sent to District Jail, Rohtak to undergo the sentence passed upon him. It has been further stated that at the time of conviction he was 19 years of age and as such he was sent to B.I. & J. Jail, Hissar. He was transferred back to this Jail (Rohtak District Jail) on 16.12. 1981 for trial in IInd case (FIR No. III,78 U/s 452/325/34 I.P.C.). He was acquitted in this IInd case and as he was about 21 years of age so he was kept in the Jail to undergo the life imprisonment imposed upon him on 22.5. It has 1064 been further averred that after the amendment of the Crimi nal Procedure Code the petitioner being sentenced to life imprisonment has to undergo 14 years of substantive sentence U/s 433 A of the Code before his case can be considered for pre mature release. The detail of sentence undergone by the petitioner as on 22.12. 1986 was also given in the said affidavit wherefrom it appears that he has already undergone 7 years, 3 months and 3 days actual sentence upto 22.12. It has therefore been stated that the petitioner having not undergone 14 years of actual sentence, he can not be released pre maturely. It is evident from the averments made in the writ peti tion as well as in the said counter affidavit that the petitioner who was admittedly adolescent at the time of his conviction was sent to Borstal Institute at Hissar. Subse quently, he has been transferred to the District Jail at Rohtak and is undergoing the sentence of imprisonment for life. It appears from the objects and reasons of Punjab Borstal Act, 1926 that the object of the Act is to provide for segregation of adolescent prisoners from those of more mature age, and their subsequent training in separate insti tutions. These Borstal Institutions are meant for detaining adolescent offenders and to impart to them such industrial training and other instructions and subject them to such disciplinary and moral influence as will conduce to their reformation. This is evident from the provisions of section 2(1) of Punjab Borstal Act, 1926. Sub section (2) of section 2 defines 'detained ' as detained in and 'detention ' as detention in a Borstal Institution. Section 5 of the said Act which is very vital for the purpose of decision of this case is quoted hereinbelow: "5. Powers of courts to pass a sentence of detention in a Borstal Institution in the case of a convict under twenty one years of age in lieu of transportation or rigorous imprison ment (1) When any male person less than twenty one years of age is convicted of an offence by a court of sessions, a Magistrate specially empowered under section 30 of the Code of Criminal Procedure, 1898, or a Judi cial Magistrate of the first class, or is ordered to give security for good behaviour and fails to give such security, and when by reason of his criminal habits or tendencies or associations with persons of bad character it is expedient in the opinion of the Judge or Magistrate, that he should be detained, such Judge or Magistrate may, in lieu of passing a sentence of transportation or rigorous impris onment, pass an order of detention for a term which shall not be less than two years and shall not exceed seven years when the order 1065 is passed by a court of sessions or a Magis trate specially empowered under Section 30 of the Code of Criminal Procedure, 1898, and shall not be less than two years nor exceed three years, when the order is passed by a Judicial ' Magistrate of the first class not so empowered. (2) When any Judicial Magistrate not empowered to pass such order, is of opinion that an offender convicted by him is a person in respect of whom such order should be passed in accordance with the provisions of sub section (1), he may, without passing any sentence, record such opinion and submit his proceedings and forward the accused to the Chief Judicial Magistrate to whom he is subor dinate. (3) The Chief Judicial Magistrate to whom the proceedings are so submitted may make such further enquiry (if any) as he may deem fit and pass such order for the detention of the offender or such other sentence or order, as he might have passed if the trial had been held by him from its commencement. " Thus it is manifest from Section 5 of the said Act that either a Sessions Judge or a Magistrate of first class or a Magistrate specially empowered under Section 30 of the Code of Criminal Procedure after convicting any male person who is less than twenty one years of age, of an offence punisha ble with imprisonment for life or transportation or other rigorous imprisonment or a convict is ordered to give secu rity for good behaviour and fails to give such security, may in lieu of passing a sentence of transportation or rigorous imprisonment pass an order of detention which shall not be less than two years and shall not exceed seven years when an order is passed by a court of sessions or a Magistrate specially empowered under the Code of Criminal Procedure. The petitioner who was adolescent admittedly being less than twenty one years of age at the time of his conviction though convicted U/s 302/34 I.P.C. and sentenced to imprisonment for life, was sent to the Borstal Institute in accordance with the provisions of Punjab Borstal Act, 1926. On his attaining the age of about twenty one years he was trans ferred back to the Jail. There is no provision except sec tion 20 under the said Act for transferring back an adoles cent convict on his attaining the age of twenty one years from the Borstal Institute to Jail for undergoing the unex pired term of imprisonment. On the other hand on a plain reading of section 5 it is clear that the adolescent convict under twenty one years of age after expiry of his period of detention 1066 has to be released from detention and he is not to be trans ferred to Jail for undergoing the unexpired period of his sentence of imprisonment. Section 20 of the said Act is in the following terms: "20. Incorrigibles Where an inmate is report ed to the State Government by the visiting committee to be incorrigible or to be exercis ing a bad influence on the other inmates of the institution or is convicted under section 19 of this Act or is reported by the Superin tendent to have committed an offence which has been declared to be major Borstal Institution offence by rules made by the State Government in pursuance of the provisions of sub section (14) of section 34 of this Act, the State Government may commute the residue of the terms of detention to such term of imprison ment of either description not exceeding such residue as the State Government may direct, and may order the transfer of the inmate to any jail in Punjab in order to complete the said term of imprisonment. " This section empowers the State Government to commute the residue of the term of detention of an inmate in Borstal Institute to such term of imprisonment of either description not exceeding the residue as the State Government may direct and also to order transfer of the inmate to any jail in Punjab in order to complete the said term of imprisonment when such an inmate is reported to be incorrigible or his exercising bad influence on the other inmates of the Insti tution or such an inmate has committed a major Borstal Institution offence as provided in the rules. There is nothing to show that the petitioner was ever found to be incorrigible or to be exercising a bad influence on the other inmates of the Institution or is found to have commit ted any major Borstal Institution offence and the State Government has not passed any order for his transfer from the Borstal Institution to Jail for undergoing the residue of his term of imprisonment. This Court while considering an identical case in the State of Andhra Pradesh vs Vallabhapuram Ravi ; has observed that "a person detained in a Borstal School under section 10 A has to be released after he has served the full term of 5 years of detention or on his completing 23 years of age. He cannot be retransferred thereafter to prison. Such a retransfer would defeat the very object and purpose of the Act of providing for deten tion of young offenders in Borstal School for the purpose of reformation and rehabilitation of such offenders. " It is to be noted in this connection that 1067 sentence of detention is passed in lieu of sentence of imprisonment which may have been passed. Hence the detention order U/s 5 of the said Act is not imprisonment and Borstal School where the adolescent offender is detained is not a prison. It has also been observed further that "Section 433 A, Cr. PC would not operate where a person is detained by an order under Section 10 A of the Act. Section 433 A of the Code was introduced not to set at naught provisions like 10 A of the Act which dealt with a special class of offend ers like adolescent offenders but only to regulate capri cious and arbitrary decisions under Section 432 of the Code and the remission rules sometimes reducing the sentence of imprisonment for life imposed on persons who had been con victed of capital offences but had been sentenced to impris onment for life to short periods like five to six years. " On a conspectus of the aforesaid decision as well as on a consideration of the facts and circumstances the only conclusion follows that the petitioner who has already undergone actual imprisonment for seven years is entitled to be released from detention and from imprisonment. Paragraph 5 16 B of the Punjab Jail Manual is not applicable in this case as the petitioner who was an adolescent convict below twenty one years of age was sent to the Borstal Institute at Hissar for detention in accordance with the provisions of Section 5 of the Punjab Borstal Act, 1926. He being convict ed by the Sessions Judge the maximum period of detention as prescribed by the Act is seven years. We have already said hereinbefore that such an inmate of the Borstal Institute cannot be transferred to Jail on the ground that he has attained the age of twenty one years as the said Act does not provide for the same. The only provision for transfer to Jail is in the case of incorrigible inmate or inmates con victed of major Borstal Institution offence. The petitioner who was ' detained in a Borstal Institute is entitled to be released and to be set free as he has already undergone detention for a period of seven years. The Writ Petition is therefore allowed. The respondents are directed to release the petitioner from imprisonment forthwith. There will be no order as to costs. S.L. Petition allowed.

The petitioner, aged about 18 years, was convicted for an offence u/s 302/34 I.P.C. and sentenced to life imprison ment by judgment and order dated 22nd May, 1980, and being admittedly below 21 years of age at the time of commission of the offence, was sent to Borstal Institution in accord ance with the provisions of the Punjab Borstal Act, 1926. The Petitioner filed this writ petition in this Court, stating that the total period of detention under gone by him, together with the remissions earned by him, came to over ten years, and he was entitled to be released both under the Punjab Borstal Act as well as under paragraph 516 B of the Punjab Jail Manual. The petitioner, therefore, prayed for his premature release as provided under the Punjab Borstal Act and the paragraph 516 B of the Punjab Jail Manual. On behalf of the respondents, a counter affidavit was filed by the Superintendent, Rohtak District Jail, where the petitioner was first sent after his conviction and sentence u/s 302/34 I.P.C., and where he was brought again from the Borstal Institute in connection with another case and was now being kept, as he had attained the age of 21 years. Allowing the writ petition, the Court, HELD: The petitioner was sent to Borstal Institute at Hissar as he was admittedly adolescent at the time of his conviction, and was subsequently transferred to the District Jail at Rohtak to undergo the sentence of imprisonment for life. [1064C] It appears from the objects and reasons of the Punjab Borstal Act, 1926, that the object of the Act is to provide for the segregation of the adolescent prisoners from those of more mature age, and their subsequent training in sepa rate Borstal Institutions meant for detaining the adolescent offenders and for imparting to them industrial training and 1062 subjecting them to such disciplinary and moral influence as will conduce to their reformation. [1064C E] Under section 5 of the Act above said, either a Sessions Judge or a Magistrate of first class or a Magistrate spe cially empowered under section 30 of the Code of Criminal Procedure, after convicting any male person, less than twenty one years of age, of an offence punishable with imprisonment for life or transportation or other rigorous imprisonment, or in the case of a convict who is ordered to give security for good behaviour and he fails to give such security, may in lieu of passing a sentence of transporta tion or rigorous imprisonment pass an order of detention which shall not be less than two years and more than seven years when an order is passed by a Court of Sessions or a Magistrate. The petitioner, when he was convicted u/s 302/34 I.P.C. and sentenced to imprisonment for life, was adoles cent being less than twenty one years of age and was sent to the Borstal Institute in accordance with the provisions of the Punjab Borstal Act, 1926. On his attaining the age of about twenty one years, he was transferred back to the jail. There is no provision except section 20 in the said Act for transferring back an adolescent convict on his attaining the age of twenty one years from the Borstal Institute to jail for undergoing the unexpired term of imprisonment. On the other hand, under section 5 of the Act an adolescent convict under twenty one years of age, after the expiry of his period of detention, has to be released from detention and he is not to be transferred to jail for undergoing the unexpired period of his sentence of imprisonment. Section 20 empowers the State Government ' to commute the residue of the term of detention of an inmate of the Borstal Institute, and also order his transfer to any jail in Punjab to complete the said term of imprisonment when such an inmate is report ed to be incorrigible or is exercising bad influence on the other inmates of the Institution or has committed a major Borstal Institution offence as provided in the rules. There was nothing to show that the petitioner had been even found to be incorrigible or to be exercising a bad influence on the other inmates of the Institution, etc., as stated above, and the State Government had not passed any order for his transfer to the jail as mentioned above. [1065E H; 1066A, D F] On a conspectus of the decision of this Court in the State of Andhra Pradesh vs Vallabhapuram Rani, ; , and on a consideration of the facts and circum stances of the case, the only conclusion that followed was that the petitioner, who had already undergone actual im prisonment for seven years, was entitled to be released from detention and imprisonment. Paragraph 516 B of the Punjab Jail 1063 Manual was not applicable in this case. The Court directed the respondents to release the petitioner from imprisonment forthwith. [1067C D; G] State of Andhra Pradesh vs Vallabhapuram Rani, [1984]4S.C.C. 410, referred to.

Appeal No. 2134 of 1970. Appeal by special leave from the judgment and order dated March 5, 1970 of the Madhya Pradesh High Court in (Indore Bench) in Second Appeal No. 618 of 1964. K. Rajendra Chowdhry, for the appellant. P. C. Bhartari, D. N. Mishra and J. B. Dadachanji, for, respondent No. 1. 302 The Judgment of the Court was delivered by BEG, J. This is a Defendant 's appeal by Special Leave against the judgment and decree of the High Court of Madhya Pradesh allowing a second appeal in a partition suit between members of a family governed by Muslim law. The Defendant Appellant and the Plaintiff Respondent are both sons of Kadir Ali Bohra who died on 5 4 1952 leaving behind five sons, a daughter and his widow as his heirs. It appears that Kadir Ali had incurred debts so heavily that all his property would have been swallowed up to liquidate these. Three of his sons, namely, Ghulam Abbas, Defendant No. 1, Abdullah, Defendant No. 2, and Imdad, Defendant No. 3, who had prospered, came to his rescue so that the property may be saved. But, apparently, they paid up the debts only in order to get the properties for themselves to the exclusion of the other two sons, namely, Kayyumali, Plaintiff Respondent, and Nazarali, Defendant No. 4, who executed, on 10 10 1942, deeds acknowledging receipt of some cash and moveable properties as consideration for not claiming any rights in future in the properties mentioned in the deeds in which they gave up their possible rights in future. The executant of each deed said : "I have accordingly taken the ' things mentioned above as the equivalent of my share and I have out of free will written this. I have no claim in the properties hereafter and if I put up a claim in future to any of the properties I shall be proved false by this document. I shall have no objection to my father giving any of the properties to my other brothers. .". During the father 's life time, when all chance or expectation of inheritance by either Kayyumali or Nazarali could be destroyed by disposition of property, neither of these two raised his little finger to object. The only question before us now is whether the Plaintiff and Defendant No. 4 are estopped by their declarations and conduct and silence from claiming their shares in the properties covered by these deeds. The first Appellate Court, the final court on questions of fact, recorded the following findings, after examining the, whole set of facts before it, to conclude that the plaintiff and defendant No. 4 were estopped from claiming their shares in the inheritance "In the instant case, it is evident that the release deeds exhibit D/2 and exhibit D/3 were executed by the plaintiff and defendant No. 4, Nazarali, when the defendants NO. 1, 2 and 3 had with their labour and money straightened the status of his father Kadar Ali and had cleared up the debts which would have devoured the, 303 whole property of Kadar Ali and the plaintiff was doing nothing and was in a way a burden to his father. In such state of things when the plaintiff and defendant No. 4 executed the release deeds in question, it can be said that it was a family settlement to prevent the future disputes that may arise and to secure the peace and happiness in the family of the parties and thereby induced the defendants No. 1, 2 and 3 to believe that the plaintiff would not claim a share in the suit properties and led them to discharge the debts due to Kadar All and to be in affluent circumstances themselves as they are at present and the plaintiff now seeks benefit of it against his own past undertakings". The High Court reproduced the passage, quoted above, from the judgment of the First Appellate Court, without any dissent from any of the findings of fact contained there. It specifically held that the Court below was correct in finding that consideration had passed the Plaintiff and Defendant No. 4 for the relinquishment of their future possible rights of inheritance. It proceeded on the assumption that, it the law had not prohibited the transfer of his right of inheritance by a Muslim heir, an estoppel would have operated against the Plaintiff and Defendant No. 4 on the findings given. It held that the rule. of Muslim Personal law on the subject has the same effect as Section 6(a) of the Transfer of Property Act which lays down: "The chance of an heir apparent succeeding to an" estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be transferred. It pointed out that, although, Section 2 of the Transfer of Property Act provided that nothing in the second Chapter of the, Act will be deemed to affect any rule of Mahomedan Law, so that section 6(a) contained in Chapter 2 could not really be applied, yet, the effect of Mahomedan Law itself was that the chance of a Mahomedan heir apparent succeeding to an estate cannot be the subject of a valid transfer or lease" (See : Mulla 's Principles of Mahomedan Law 17th Edn. ss 54, page 45). After equating the effect of the. rule of Mahomed an Law with that of Section 6(a) of the Transfer of Property Act, the High Court applied the principle that no estoppel can arise against statute to what it considered to be an estoppel put forward against a rule of Mahomedan law. The High Court had relied on a decision of the Madras High ' Court in Abdul Kafoor vs Abdul Razack(l), which had been (1) A.I.R. 1959 Mad. p. 131. 304 followed by the Kerala High Court without giving fresh reason in Valanhivil Kunchi vs Kengayil Pattikavil Kunbi Avulla(1) in preference to the view adopted by the Allahabad High Court in Latafat Hussain vs Hidayat Hussain(2) followed by the, Travancore Cochin High Court in Kochunni Kachu Muhammed vs Kunj Pillai Muhammed(3) The principal question for decision before us is whether the Madras or the Allahabad High Court view is correct. The Madras High Court, in Abdul Kapoor 's case (supra) had specifically dissented from the Allahabad view in Latafat Hussain ' case (supra) on the ground that, if an estoppel was allowed to pleaded as a defence, on the strength of relinquishment of a spes successionis for consideration, the effect could be to permit the pro visions of Mahomedan Law to be defeated. Hence, it held that such an attempt would be struck by section 23 of the Indian Con tract Act. The object however, of the rule of Mahomedan law which does not recognise a purported transfer of a spes succession is as a legally valid transfer at all, is not to prohibit anything but only to make it clear what is and what is not a transferable right or interest in property just as this is what section 6(a) of Transfer of Property Act is meant to do. Its purpose could not be to protect those who receive consideration for what they do not immediately have so as to be able to transfer it at all. It could, if protection of any party to a transaction could possibly underlie such a rule, be more the protection of possible transfers so that they may know what is and what is not a legally enforceable transfer. With due respect, we are unable to concur with the view of the Madras High Court that renunciation of an expectancy, as a purported but legally ineffective transfer, is struck by Section 23 of the Indian Contract Act. As it would be void as a transfer at all there was no need to rely on Section 23 Contract Act, If there was no "transfer". of property at all, which was the correct position but a simple contract, which could only operate in future, it was certainly, not intended to bring about an immediate transfer which was all that the rule of Muslim law invalidated. The real question was whether quite apart from any transfer or contract, the declarations in the deeds of purported relinquishment and receipt of valuable consideration could not be parts of a course of conduct over a number of years which, taken as a whole, created a, bar against a successful assertion of a right to property when that Tight actually came ' into being. An equitable estoppel operates, if its elements are established, as a rule of evidence preventing the assertion of rights which may otherwise exist. (1) A.F.R. 1964 Kerala P. 200 (2) A I R. 1936 All. 573. (3) A.I.R. 1956 Travancore 217. 305 High Court in Asa Beevi vs Karuppan(1) where Macnaghten 's "Principles and Precedents of Moohumudan Law", Sir Roland Wilson 's Digest of Anglo Mohhamadan Law" P. 260, and Ameer Ali 's "Mohommedan Law" (Vol. II, third edition, p. 50 51), and Tyabji 's "Muslim Law" have been referred to in support of the conclusion that ",here is a large preponderance of authority in favour of the view that a transfer or renuniciation of the right of inheritance before that right vests is prohibited under the Mahomedan Law". The whole discussion of the principle in the body of the judgment, however brings out that the real reason is not a prohibition but that there cannot be a renunciation of a right which is incohate or incomplete so long as it remains in that state. In fact, it is not correct to speak of any right of inheritance before it arises by the death of the predecessor who could have, during his life time, deprived the prospective heir of his expectation entirely by dispositions inter vivos. Sir Roland Wilson, in his "Anglo Mohhamadan Law" (P 260, paragraph 208) states the position thus : "For the sake of those, readers Who are familiar with the joint ownership of father and son according to the most widely prevalent school of Hindu Law, it is perhaps desirable to state explicitly that in Muhammadan, as in Roman and English Law, nemo est heres viventis a living person has, no heir. An heir apparent or presumptive has no such reversionary interest as would enable him to object to any sale or gift made by the owner in possession; see Abdul Wahid, L.R. 12 I.A., 91, and All., 456 (1885) which was followed in Hasan Ali, 1 1 All. 456 (1889). The converse is also true : a renunciation by an expectant heir in the lifetime of his ancestor is not valid, or enforceable against him after the vesting of the inheritance". This is a correct statement, so far as it goes, of the law, because a bare renunciation of an expectation to inherit not bind the expectant heir 's conduct in future. But if the expectant heir goes further and receives consideration and so conducts himself as to mislead an owner into not making dispositions of his property inter vivos the expectant heir could be debarred from setting up his right when it does unquestionably vest in him other words, the principle, of estoppel remains untouched by this statement. As the Madras Full Bench pointed out, the subject was dis cussed more fully, in Ameer Ali 's "Mohammedan Law" (Vol. 11), than elsewhere. There we find the reason for or the object underlying the rule. It is that there is nothing to renounce in such a case because an expectancy remains at most before it has mate (1) [1918] (41 Madras) I.L.R. 365. 306 rialized only an "incohate right". It is in this light that the following observations in Hurmoot Ool Nisa Begum vs Allehdia Khan,(`) is explained by Ameer Ali : "According to the Mahomedan Law the right of inheritance may be renounced and such renunciation need not be express but may be implied from the ceasing or desisting from prosecuting a claim maintainable against another. " Ameer Ali explained, citing an opinion of the law officers, given in Khanum Jan vs Jan Bibi; (2 .lm15 "Renunciation implies the yielding up of a right already vested, or the ceasing or desisting from prosecuting a claim maintainable against another. It is evident that, during the life time of the mother the daughters have no right of inheritance and their claim on that account is not maintainable against any person during her life time. It follows, therefore, that this renunciation during the mother 's life time of the daughters ' shares is null and void it being in point of fact giving up that which had no existence. " In view of the clear exposition of the reason for the rule contained in the authorities relied upon by the Full Bench of the Madras High Court in Asa Beevi 's case (supra), we think that it described, by oversight, a rule based on the disability of a person to transfer what he has not got as a rule of prohibition enjoined by Mohamedan Law. The use of the word "prohibited" by the Full Bench does not really bring out the object or character of the rule as explained above. It may be mentioned here that Muslim Jurisprudence, where theology and moral concepts are found sometimes mingled with secular utilitarian legal principles, contains a very elaborate theory of acts which are good (because they proceed from 'hasna '), those which are bad (because, they exhibit "qubuh"), and those which are neutral per se. It classifies them according to 'varying degrees of approval or disapproval attached to them (see Abdur Rahim 's "Muhammadan Jurisprudence" P. 105). The renunciation of a supposed right, based upon an expectancy, could not, by any test found there, be considered "prohibited". The binding force in 'future of such a renunciation would, even according to strict Muslim Jurisprudence, depend upon the attendant circumstances and the whole course of conduct of which it forms a part. I In other words, the principle of an equitable estoppel, far from being opposed to any principle of Muslim law will be found, on investigation, to be completely in consonance with it. (1) [1871] 17 W.R.P.C. 108 (2) [1827] 4 S.D.A. Rep. 210. 307 As already indicated, while the Madras view is based upon the erroneous assumption that a renunciation of a claim to inherit in future is in itself illegal or prohibited by Muslim law, the view of the Allahabad High Court, expressed by Suleman, C.J., in Latafat Hussain 's case (supra) while fully recognising that "under the Mahomedan law relinquishment by an heir who has no interest in the life time of his ancestor is invalid and void", correctly lays down that such an abandonment may, nevertheless, be part of a course of conduct which may create an estoppel against claiming the right at a time when the right of inheritance has accrued. After considering several decisions, including the Full Bench of, the Madras High Court in Asa Beevi 's case (supra) Suleman, C.J., observed at page 575 : "The question of estoppel is really a question arising, under the Contract Act and the Evidence Act, and is not a question strictly arising under the Mahomedan Law. " He pointed out (at page 575 576) "It has been held in this Court that contingent reversioners can enter into a contract for consideration which may be held binding on them in case they actually succeed to the, estate : See , and It was pointed out in , at PP. 876 7, that although a reversionary right cannot be the subject of a transfer, for such a transfer is prohibited by section 6, T.P. Act, there was. nothing to prevent a re versioner from so acting as to estop himself by his own ,conduct from subsequently claiming a property to which he may succeed. Among other cases reliance was placed on the pronouncement of their Lordships of the Privy Council in 40 All 487, where a reversioner was held bound by a compromise to which he was a party. " Incidentally, we may observe that, in Mohammad Ali. Khan vs Bisar Ali Khan,(1) the Oudh Chief Court has relied upon Hurmoot Ool Nisa Begum 'section case (supra) to hold that "according to Mahomedan Law there may be renunciation of the right to inheritance and such renunciation need not be express but may be implied from the ceasing or desisting from prosecuting a ,claim maintainable against another". As we are clearly of opinion that there is nothing in law to bar the application of the principle of estoppel, contained in Section 115 of the Evidence Act, against the plaintiff and (1) A.I.R. 1928 Oudh 67. 308 Defendant No. 4, upon the totality of facts found by the final Court of facts, which were apparently accepted by the High Court,, it is not necessary for us to deal at length with the question whether the facts found could give rise to the inference of a "family settlement" in a technical sense. It is true that in Latafat Hussain 's case (supra) Suleman, C.J., had observed that the conclusion of the Subordinate Court, that there had been an arrangement between a husband and a wife "in the nature of a family settlement which is binding on the plaintiff", was correct. This was held upon circumstances which indicated that a husband would not have executed a deed of Wakf if the wife had not relinquished her claim, to inheritance. In other words, an arrangement which may avoid future disputes in the family, even though it may not technically be a settlement or definition of actually disputed claims, was referred to broadly as a "family arrangement". It was in this wide sense that in the case before us also, the first Appellate Court had considered the whole set of facts and circumstances examined by it to be sufficient to raise the inference of what it described as a "family settlement". As our law relating to family arrangements is based on English law, we may refer here to a definition of a family arrangement in Halsbury 's Laws of England, (1) where we find: A family arrangement is an agreement between members of the same family intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed rights or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour. We also find there : The agreement may be implied from a long course of ,dealing, 'but it is more usual to embody or to effectuate the against in a deed no which the term 'family arrangement ' is :applied. " It is ,pointed out there : "Matters which would be fatal to the validity of similar transactions between strangers are not objections to the binding effect of family arrangements. " As we have already indicated, it is enough for the decision of this case that the plaintiff and defendant No. 4 were estopped by their conduct, on an application of Section 115 Evidence Act, from claiming any Tight to inheritance which accrued to them, on their father 's death, covered by the deeds of relinquishment for consideration, irrespective of the question whether the, deeds could operate as legally valid and effective surrenders of their spes successionis. Upon the facts and circumstances in (1) Halsbury 's Laws of England, 3rd. 17, p. 215,216. 309 the case found by the courts ,below we hold that the plaintiff and defendant No. 4 could not, when rights of inheritance vested in them at the time of their father 's death, claim, these as such a claim would be barred by estoppel. The result is that we allow this appeal, set aside the judg ment and the decree of the High Court, and restore that of the first Appellate Court. In the circumstances of this case, we order that the parties will bear their own costs. K.B.N. Appeal allowed.

Muslim jurisprudence, where theology and moral concepts are found sometimes mingled with secular utilitarian legal principles, contains a very elaborate theory of acts which are good (because they proceed from haana), those which are bad (because they exhibit 'qubuh '), and those which are neutral per se. It classifies them according to varying degrees of approval or disapproval attached to them. The renunciation of a supposed right, based upon an expectancy, could not, by any test found there, be considered "prohibited". The binding, force in future of such a ren uticiation would, even according to strict Muslim jurisprudence, depend upon the attendant circumstances and the whole course of conduct of which it forms a part. In other words, the principle of equitable estoppel, far from being opposed to any principle of Muslim Law will he found, on investigation, to be completely in consonance with it. [306 F] Abdul Rahim, Muhammedan Jurisprudence, P. 106, referred to. K, a Muslim, had incurred debts so heavily that all his property would have been swallowed up to liquidate the debts. The appellant and two of his brothers, with their labour and money, rescued the estate of their father and paid up the debts. Two other sons of K who could not con tribute anything towards the clearing up of the debts of their father executed deeds acknowledging receipt of cash and moveable properties as consideration for not claiming any eights in future in the properties mentioned in the deeds. On K 's death the two sons who had executed the deeds instituted a suit for partition of the properties mentioned in the deeds. The first appellate court ,held that the deeds in question evidenced family settlements and that the sons were estopped from claiming their share in the inheritance. The High Court in second appeal, decreed the suit. It proceeded on the assumption that, if law had not prohibited the transfer of his right of inheritance by a muslim heir, an estoppel would have operated against the respondent on the findings given and held that the rule of Muslim Personal law on the subject had the same effect as Section 6 (a). of the Transfer of Property Act and the chance of a Mahomedan heir apparent succeeding to an estate could not be the subject of a valid transfer of lease. In coming to this conclusion, the High Court relied on the decision of the Madras High Court in Abdul Kafoor vs Abdul Razack (A.I.R. in preference to the view adopted by the Allahabad High Court in Latafat Hussain vs Bidayat Hussain (A.I.R. 1936 All. 573.) Allowing the appeal and setting aside the judgment and decree of the High Court, HELD: Upon the facts and circumstance in the case found by the courts below, the two sons could not, when rights of inheritance vested 301 in them at the time of, their father 's death, claim these rights as such a claim would be barred by estoppel. The object of the rule of Mahomedan law which does not recognise a purported transfer, of a spes successionis as a legally valid transfer at all, is not to prohibit anything but only to make it clear what is and what is not a transferable right or interest in property just as this is what Section 6(a) of the Transfer of Property Act is meant to do. Its purpose could not be to protect those who, receive consideration for what they do not immediately have so as to be able to transfer it at all. It is not possible to concur with the view of the Madras High Court in Abdul Kafoor 's case that a renunciation of an expectancy, as a purported but legally ineffective transfer, is struck by section 23 of the Indian Contract Act. As it would be void as a transfer at all there was no need to rely on section 23 of the Contract Act, If there was no "transfer" of property at all, which was the correct position, but a simple contract which could only operate in future, it was certainly not intended to bring about an immediate transfer which was all that the rule of muslim law invalidated. The real question is whether, quite apart from any transfer or contract, the declarations in the deeds of purported relinquishment and receipt of valuable consideration could not be parts of a course of conduct over a number of years which, taken as a whole, created a bar against a successful assertion of a right to property when that right actually, came into being. An equitable estoppel operates, if its elements are established as a rule of evidence preventing the assertions of rights which may otherwise exist. [304 D] While the Madras view is based upon the erroneous assumption that a renunciation of a claim to inherit in future is in itself, illegal or prohibited by Muslim law, the View of the Allahabad High Court in Latafat Hussain 's case, while fully recognising that "under the Mohammedan law relinquishment by an heir who has no interest in the life time of his ancestor is invalid and void", correctly lays down that such an aban donment may nevertheless, be part of a course of conduct which may create an estoppel against claiming the right at a time when the right of inheritance has accrued. Latafat Hussain vs Bidayat Hussain, A.I.R. 1936 All. 573, approved. View contra in Abdul Kafoor vs Abdul Ratack, A.I.R. 1959 Mad.131 and Asa Beevi vs Karuppan, (1918) 41 Madras I.L.R. 365, disapproved. Ameer Ali 's Mahomedan Law, Vol. 11, Hurmoot Ool Nisa Begum vs Allahdis Khan, (1871) 17 W.R.P.C. 108 and Mohammad Ali Khan vs Nisar Ali Khan, A.I.R. 1928 Oudh 67, referred to. (Since the Court was of opinion, that there was nothing in law to bar the application of the principle of estoppel contained in section 115 of the Evidence Act upon the totality of facts found by the final court of facts, it was found unnecessary to deal with at length with the question whether the facts found could give rise to an inference of a "family settlement" in a technical sense.)

ivil Appeal No. 4586 of 1989. From the Judgment and Order dated 14.3.1983 of the Delhi High Court in R.F.A. (O.S.) No. 3 of 1983. Pallav Shishodiya and D. Bhandari for the Appellant. V.C. Mahajan, Arun Madan and C.V.S. Rao for the Respondents. The Judgment of the Court was delivered by RAY, J. Special leave granted. Arguments heard. This is an appeal against the judgment and order passed in R.F.A. (OS) 3 of 1983 on March 14, 1983 by the High Court of Delhi dismissing the Civil Writ Petition in limini against the judgment and decree rendered by Chawla, J. in Suit No. 50 of 1972 on February 12, 1982. The matrix of this case is stated hereunder. The appellant M/s Marwar Tent Factory is a firm having its registered office at Jodhpur (Rajasthan) and dealing in the manufacture and sale of tents and tarpaulins. The firm is a regular supplier of these goods to the defence services of India. On March 13, 1986 tenders were invited for the supply of tents by the Directorate General of Supplies and Disposals, the respondent No. 2. Accordingly, the appellant submitted a tender which was accepted by the officer of the Directorate General of Supplies and Disposals on behalf of the President of India. The said contract was of two kinds of tents 'Flies Inner ' and 'Flies Outer '. The agreed rate for the 'Flies Outer ' was Rs.225 per tent and the quantity was 19,100. In accordance with the said terms of the contract the goods were to be inspected at the premises of the firm at Jodhpur and after the same being passed by the Inspector, the goods had to be despatched to the Commandant, C.O.D. Kanpur. It was further agreed between the 130 parties that 95% of the price was payable on proof of des patch and production of the inspection note. The balance 5% was to be paid after receipt of the goods in good condition by the C.O.D., Kanpur. On October 14, 1968, one consignment of 1500 tents was despatched to the C.O.D., Kanpur by the appellant under Railway receipt No. 502671 dated 14.10.1968 and 95% of the price was paid by demand drafts dated 17.10.1968 and 19.5.1969. The Commandant, C.O.D., Kanpur reported that 224 tents out of a sale consignment had not been received at Kanpur and consequently a sum of Rs.51,912 (being the full price of those 224 tents inclusive of sales tax) was deduct ed from the amounts due to the appellant under another contract. The appellant made repeated requests and sent repeated reminders for payment of the said sum of Rs.51,912 from the respondent but without any effect. As such, the appellant filed a suit being Suit No. 50 of 1972 in the High Court at Delhi for recovery of the said principal sum as well as interest on the principal. The appellant further claimed interest on two other consignments as the price of the said consignments was paid after a great delay. The two consign ments were of 700 and 1400 tents despatched on August 10, 1968 and August 27, 1968 respectively. Though 95% of the price was paid, the balance 5% amounting to Rs.24,357 was not paid till December 1, 1971 despite repeated requests and reminders. The said payment of Rs.24,357 was wrongfully delayed by about three years and a sum of Rs.8,525 was, therefore, claimed as interest @ 12% per annum from 1.1.1969 to 1.12.1971 on the said amount. The total claim of the appellant was of Rs.74,972 i.e. Rs.51,912 principal sum and Rs. 14.535 as interest on this and Rs.8,525 as interest on the sum of Rs.24,357 wrongfully withheld for three years. A joint statement was filed by the respondent Nos. 1, 2 & 5 as their interest were identical. The defence was that 224 tents were received short under railway receipt No. 502671 and the sum of Rs.51,9 12 was rightly deducted from the payment due to the appellant under other contracts. The respondent Nos. 3 and 4 also filed a joint written statement stating inter alia that only 11 tents were deliv ered short under railway receipt No. 502671 for which the admitted liability was to the tune of Rs.2,475. This sum had been paid to the C.O.D., Kanpur by debit adjustment. 131 T.P.S. Chawla, J by his judgment and order dated Febru ary 12, 1982 though dismissed the claim of the appellant substantially but in so far as the amount of Rs.2,475 re garding the shortage of 11 terms admitted by respondent Nos. 3 and 4 was concerned, decreed the said sum in favour of the appellant with interest @ 12% per annum from 1.4.1972 till the date of judgment and further interest @ 6% from the date of judgment till the realisation of the amount. Against the said judgment and decree the appellant preferred an appeal being R.F.A. (OS) No. 3 of 1983 before the Division Bench of the said High Court. The said appeal was, however, dismissed by the High Court of Delhi by order dated March 14, 1983. The instant appeal on special leave has been preferred by the appellant against the aforesaid judgment and decree. The crucial question that requires consideration in this appeal is whether 1500 tents which were loaded in the rail way wagons on October 14, 1968 at Jodhpur for delivery to the respondent No. 5, the Commandant, C.O.D., Kanpur under railway receipt No. 502671 were actually delivered to the respondent No. 5. It has been held by the Trial Court i.e. learned single Judge, High Court, Delhi that the tents were carried in 3 wagons upto Agra. The railway line from Jodhpur to Agra was a meter gauge. Thereafter, from Agra to Kanpur which is a broad gauge line the tents were put into four broad gauge wagons at Agra for onward transmission to Kan pur, as evident from the transmission, register. It has been found that the railways could not establish the delivery of 224 tents under railway receipt No. 502671 to the Comman dant, C.O.D., Kanpur from the unloading register. The short age certificate issued by the railways corroborates the entries in the unloading register. The particulars of the consignment are set out in the heading of this document. The railway receipt is No. 502671 and the names of the sendor and consignee are also mentioned. The Traffic Officer, Commandant, C.O.D., Kanpur filed a claim with the railways on February 10, 1969 for 224 packages received short and this claim was made under railway receipt No. 502671. The plea of the railways was that the shortage was of 11 tents and not of 224 tents. It has been found by the Trial Court that this plea is falsified by the unloading register, the shortage certificate and the reconciliation statement as also the report made by their Traffic Inspector on December 9, 1970. Accordingly, it was held that under railway receipt No. 502671 the appellant delivered the full quantity of 1500 tents to the railways but the latter failed to deliver 224 tents out of this consignment to the Commandant, C.O.D., Kanpur and as such the railways are estopped from contending that it was under some other railway 132 receipt. The Trial Court, however, held that no decree could be passed against the railways because the plaint did not contain any claim for loss or non delivery against the railways. Secondly, the suit against the railways was barred by time and thirdly since no notice under Section 78 B of the Indian Railways Act was served on the railways by or on behalf of the appellant. The appellant, however, submitted that the title of the goods passed on to the respondent No. 5, Commandant, C.O.D., Kanpur, the moment the tents were lodged on rail head, Jodhpur as the term of delivery under the contract was F.O.R., Jodhpur. For any short delivery of the goods made by the railways at Kanpur, the appellant was not responsible and the respondent No. 5, under the terms of the contract is not entitled to deduct the price of the short delivery of tents i.e. 224 tents. It was for the Commandant, C.O.D., Kanpur to claim damages from the rail ways and the Commandant had actually made a claim as stated hereinbefore to the railways in respect of the short deliv ery. The learned single Judge, however, found that the abbreviation F.O.R. meant Free on Rail meaning simply that the cost of the carriage of the goods upto the railway wagon is included in the price and must be borne by the seller and the cost of carriage thereafter is to be borne by the buyer. It has also been held that the risk in the goods would not pass at Jodhpur as expressly stipulated in the general conditions of contract contained in Form DGS & D 68. These were made applicable by clause 7 in the Schedule of accept ance of tender. Special emphasis was laid to the condition No. 4 entitled "responsibility of contractor for executing the contract". The learned Judge has with reference to sub clause (10) of this condition held that the goods shall remain in every respect at the risk of the contractor until their actual delivery to the consignee at the stipulated place and as such the risk of the appellant remains until the goods were actually delivered to the Commandant, C.O.D. Kanpur. The argument as regards condition No. 14 of the general conditions of contract as well as its sub clause (2) entitled "passing of property" was negatived on the ground that the risk was governed by condition 4(1) of the general conditions of contact. The claim before the railways being time barred and also no notice under Section 78 B of the Indian Railways Act having been served on the Railways within the stipulated period, the appellant could not claim for damages for breach of contract and for the price of the tents not delivered. However, in respect of the price of 11 tents the shortage of which was admitted by the railways and for which a sum of Rs.2,475 was paid to the respondent No. 5 by the appellant, it was decreed with interest @ 12% per annum from 1.4.1972 till the date of passing of the decree and also further allowed interest on the said sum @ 6% per annum thereafter till the date of 133 payment. The respondents, however, did not question the finding of the Trial Court regarding the short delivery of 224 tents at the railway station at Kanpur. Admittedly, there has been a short delivery of 224 tents out of the consignment of 1,500 tents loaded at Jodhpur railway station in the railway wagon under the said receipt No. 50267 1. In order to decide and fix the responsibility for pass ing of the decree in respect of the sum of Rs.51,912 being the full price of 224 tents inclusive of sales tax deducted from the amount due to the appellant under another contract by the respondent No. 5, it is pertinent to consider the question when the property in goods passed from the seller to the buyer at Jodhpur when the goods were loaded in rail way wagons for delivery to the consignee at Kanpur. The learned counsel for the appellant drew our attention to the condition No. 11 of the Schedule of acceptance of tender dated February 29, 1968. It has been mentioned therein that the terms of delivery was F.O.R., Jodhpur i.e. free on rail at Jodhpur railway station. It has also been mentioned that before the goods are loaded on railway wagons for delivery to the respondent No. 5 at Kanpur, the Inspector, I.G.S. North India will inspect the same at firm 's premises at Jodhpur and after approval the said goods will be despatched to its destination by placing them in the railway wagons at Jodhpur railway station and the railway receipt has to be sent to the consignee under registered cover immediately after despatch of the stores with full details. It is also stipulated that 95% of the price of the goods will be paid by the respondent No. 5 on receipt of the railway receipt and the inspection note and the balance 5% will be paid after the same reached at the destination in goods condi tion. Referring to this term for delivery under clause 11 of the Schedule of acceptance of tender, it has been urged by the learned counsel for the appellant that the delivery was complete at Jodhpur when the/goods were loaded in the goods train for delivery to the respondent No. 5 at Kanpur and property in the goods passed to the buyer as soon as the goods were despatched by railway at Jodhpur. Thereafter, the risk in respect of the goods despatched remained with the consignee. The appellant, the consignor is entitled to get the entire price of the 224 tents which were short delivered by the respondent Nos. 3 and 4 to respondent No. 5 at Kanpur in view of the clear finding by the Trial Court that though the entire consignment of 1500 tents was actually loaded in the railway wagons for despatch to the consignee, the re spondent No. 5. The respondent No. 5 duly filed a claim to the railways, the respondent Nos. 3 and 4 for the short delivery to the tune of 224 tents immediately after taking delivery of the goods. In order to decide the question as to whether the rights in the goods passed from 134 the seller to the buyer i.e. from the appellant to the respondent No. 5 as soon as the goods were loaded in railway wagons at Jodhpur and the railway receipt was sent to the consignee, it is pertinent to refer to the meaning of the words F.O.R. Jodhpur. In Haulsbury 's Law of England, 4th Edition (Volume 41) at page 800, para 940 it has been men tioned that: "Under a free on rail contract (F.O.R.) the seller undertakes to deliver the goods into railway wagons or at the station (depending on the practice of the railway) at his own ex pense, and (commonly) to make such contract with the railway on behalf of the buyer as is reasonable in the circumstances. Prima facie the time of delivery F.O.R. fixes the point at which property and risk pass to the buyer and the price becomes payable." In Benjamin 's Sale of Goods (2nd Edition), at page 1799 it is stated as under: "Stipulations as to time of 'delivery ' provi sions as to the time of delivery in an f.o.r. contract are taken to refer to the time of shipment and not to the time of arrival of the goods; and this may be so even though the provision in question contemplates the arrival of the goods by a certain time. Thus in Fre bold and Sturznickel (Trading as Panda O.H.D.V vs Circle Products Ltd. German sellers sold toys to English buyers f.o.b. Continental Port on the terms that the goods were to be deliv ered in time to catch the Christmas trade. The goods were shipped from Rotterdam and reached London on November 13; but because or ' an oversight for which the sellers were not responsible the buyers were not notified of the arrival of the goods until the following January 17. It was held that the sellers were not in breach as they had delivered the goods in accordance with the requirements of the contract by shipping them in such a way as would normally have resulted in their arrival in time for the Christmas trade. " The question as to the meaning of F.O.R. contract fell for consideration in the case of Girija Proshad Pal vs The National Coal Co. Ltd., AIR 1949 (Calcutta) 472. P.B. Muk harji, J. as His Lordship then was observed in para 11 as follows: 135 "The words f.o.r. are well known words in commercial contracts. In my judgment they mean when used to qualify the place of delivery, that the seller 's liability is to place the goods free on the rail as the place of deliv ery. Once that is done the risk belongs to the buyer. " Reference may also be made in this connection to the decision of this Court rendered in The Commissioner of Sales Tax, Eastern Division, Nagpur vs Husenali Adamji and Co., [1959] 2 Supp. SCR 702. In that case under the terms of the contract the respondent Company whose place of business was situate in Chanda in the erstwhile Central Provinces had to load diverse quantities of 'sawar ' logs on railway wagons and to despatch the same from Chanda and other railway stations in the Central Provinces to Ambernath, a town in the erstwhile Province of Bombay. Clause 2 of the contract reserved the right of the consignee to examine the goods on arrival at Ambernath and to reject the same if they were found, in the opinion of the factory manager, not to conform with the specifications. Clause 6 also provided that the goods shall be measured under the supervision of the facto ry 's representative, the decision of the factory manager at Ambernath would be binding on the contractor and by clause 7 the prices of the goods shall be 'F.O.R. Ambernath '. The question arose was as to when and where the property in the logs passed from the respondent to the consignee and whether the respondent was liable to pay sales tax under the provi sions of the Central Provinces and Berar Sales Tax Act, 1947. The Sales Tax Department levied the tax on the re spondent on the ground inter alia that the property in the logs passed from the respondent to the factory consignee under section 23 of the Indian when the logs were loaded in the wagons at railway stations within the Central Provinces and the railway receipts taken in the name of the factory were forwarded to the latter. It was held: "that on a proper construction of the contract as a whole the intention of the parties was that the respondent would send the logs by rail from the different stations in the Cen tral Provinces to Ambernath where the factory manager would inspect, measure and accept the same if in his opinion they were of the de scription and quality agreed upon. Consequent ly, as the respondent sent the logs and left it to the factory to appropriate to the con tract such of them as they accepted as of contract, quality and description, the proper ty in the logs did not pass to the buyer by 136 the mere delivery to the railway for carriage but passed only at Ambernath when the logs were appropriated by the factory with the assent of the seller within the meaning of section 23 of the Indian Safe of Goods Act, 1930. " It is also convenient to refer*to the provision of Section 23(2) of the Indian . This sub section provides that: "(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have uncondition ally appropriated the goods to the contract." In the instant case, in view of the terms and conditions of the contract embodied in clause 11 of the Schedule of acceptance of tender regarding the place of delivery 'F.O.R. Jodhpur ', the property in the goods passed immediately on from the seller after delivering the goods and loading the same in the railway wagons at Jodhpur for transmission to the buyer, the consignee, without reserving any right of disposal. The seller is deemed to have unconditionally appropriated the goods to the contract only under section 26 of the said Act, the goods remained at seller 's risk until the property therein is transferred to the buyer. As stated earlier that the property in goods has been transferred to the buyer by the seller by delivery of the goods and loading the same at Jodhpur in railway wagons. In this connection reference may be made to Section 39(1) of said Act. Consid ering the aforesaid provisions of The as well as the terms and conditions of delivery i.e. 'F.O.R. Jodhpur ' the irresistible conclusion that follows is that the property in the goods together with the risk passed from the seller to the buyer i.e. from consignor to the consignee as soon as the goods were loaded in the railway wagons at Jodhpur as per the terms of delivery i.e.F.O.R. Jodhpur. Therefore, the finding of the Trial Court that the risk throughout ramained with the appellant until the goods were actually delivered to the Commandant, C.O.D., Kanpur is wholly wrong and illegal. The further finding of the Trial Court that the risk was governed with the condition No. 4(1) of the Schedule of Acceptance of Tender and the property in the goods i.e. the tents did not pass until the same were actually delivered to the Commandant, C.O.D. Kanpur and the Commandant, C.O.D. Kanpur was not liable for loss of the tents during the period of transit by the railways is also illegal and bad. As stated hereinbefore on considera 137 tion of the place of delivery as well as the terms of deliv ery embodied in clause 11 of the Schedule of Acceptance of Tender, the property in the goods along with the risk in the goods passed from the appellant to the respondent No. 5 when the goods were delivered and despatched by railway wagons at Jodhpur i.e. F.O.R., Jodhpur. The consignee, Commandant, C.O.D., Kanpur is therefore, liable for the price of 224 tents which was deducted by him from the other bills of the appellant. The findings of the Trial Court which were con firmed by the Division Bench of the High Court are, there fore, liable to be set aside and the claim of the plaintiff appellant should be decreed. As regards the claim of interest on the unpaid price of 224 tents amounting to Rs.51,912 for the period from 1.1.1969 to 1.12.1972 @ 12% per annum, the Courts below disallowed the claim on the findings that no claim for the price of the goods had been made against the railways, nor any notice under Section 78 B of the Indian Railways Act had been served on respondent Nos. 3 and 4, and the suit was barred by limitation against the Railways. We have already held hereinbefore that the appellant is entitled to get not only the price of the goods but also the interest thereon for not making the payment of the price of the goods within a reasonable time. The interest @ 12% per annum was claimed by the plaintiff appellant on Rs.51,912 being the price of 224 tents for the period from 1.1.1969 to 1.12.1972. It is appropriate to refer in this connection to the relevant provisions of Section 61(2) of the (Act 3 of 1930) which reads as follows: "61(2): In the absence of a contract to the contrary, the Court may award interest as such rate as it thinks fit on the amount of the price (a) to the seller in a suit by him for the amount of the price from the date of the tender of the goods or from the date on which the price was payable, (b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part of the seller from the date on which the payment was made. " In the instant case, undoubtedly, it has been found by the Courts below that the short delivery of 224 tents oc curred during the transmit of the said goods by the rail ways. It is also an admitted fact that the respondent No. 5, the Commandant, C.O.D. Kanpur deducted the price of the said 224 tents from the other bills of the contractor i.e. the 138 appellant and did not pay the same The appellant has claimed interest in respect of the price of the said goods being not paid to the appellant within a reasonable time from the date of delivery of the goods i.e. for the period from 1.1.1969 to 1.12.1971. The respondent No. 5 did not dispute the claim of the appellant in this regard. His only plea was that in the notices under Section 80 of the Code of Civil Procedure served on the respondents the claim of interest was not made and as such the claim of interest could not be allowed. In the case of B.B. Bose vs National Coal Trading Company, AIR 1966 (Patna) 346, the plaintiff filed a suit for recovery of price of goods sold to the defendant. Before filing the suit the plaintiff served a demand notice on the defendant. In the demand notice exhibit 2, no claim for interest was put by the plaintiff. It was urged on behalf of the defendant that there was no stipulation for payment of interest in case the price remained unpaid in the contract and as such the plain tiff could not claim any interest on the unpaid amount. This was negatived by the High Court, Patna and it was held: " . . That is, no doubt, true, but the demand clearly was for the outstanding balance price of coal which the plaintiff had supplied to the defendant. The supplies had been effected upto the 26th June, 1954, and in the normal course, the price ought to have been paid by the defendant within a reasonable time of the deliveries, but the payment had been delayed for nearly three years and plain tiff was obliged to institute the present suit for recovery of the price. In such circum stances, it was within the discretion of the court to award interest to the plaintiff at a reasonable rate on the amount of the price under section 61(2) of the . The price was undoubtedly payable when the notice of demand (exhibit 2) was served by the plaintiff upon the defendant and there can be no doubt that the rate of 6 per cent per annum which the Court awarded was a reasonable rate." Similar question cropped up for decision in the case of M/s M.K.M. Moosa Bhai Amin, Kota vs Rajasthan Textile Mills, Bhawanimandi, Raj LW 77. In this case the plaintiff filed the suit for price of the goods delivered as well as for interest on the unpaid price. The claim regarding interest was disallowed by the District Judge on the ground that there was no stipulation for pay ment of interest in case the price of the goods supplied remained unpaid. It was contended on behalf of the plaintiff that even 139 in the absence of the contract, the plaintiff was entitled to reasonable interest under Section 61(2) of the . The supply had been effected upto September 18, 1962 and in normal case the price of the goods ought to have been paid by the defendant within a reasonable time of the deliveries but the payment had been delayed for nearly a year which compelled the plaintiff to bring the suit for recovery of the price. It has been held that in such circum stances, the lower courts should have exercised discretion in favour of the plaintiff and awarded interest on the amount of the price of the goods under Section 61(2) of the . The High Court of Rajasthan allowed interest @ 6% per annum which was considered to be a reason able rate of interest. On a conspectus of all the decisions referred to before as well as the provisions of Section 61(2) of the , we are constrained to hold that the plaintiff is entitled to get a decree of interest on the unpaid price from 1.1.1969 to 1.12.1971 @ 6% per annum which is consid ered to be a reasonable rate of interest, as claimed by the plaintiff appellant. In the premises aforesaid the appeal is allowed and the judgments and the decree of the Courts below in so far as they rejected the claims regarding the price of 224 tents and interest thereon are set aside. The plaintiff appel lant 's claim for the price of the said goods as well as interest thereon @ 6% per annum for the period from 1.1.1969 to 1.12.1971 is hereby decreed. The appeal is thus allowed with costs quantified at Rs.4,000. The claim for interest @ 6% per annum for the period from 1.1.1972 till date of payment of amount unpaid is allowed. Y. Lal Appeal allowed.

The appellant is a firm dealing in the manufacture and sale of Tents and Tarpaulins at Jodhpur in Rajasthan. It carried on a regular business of supplying these goods to defence services. The Director General of Supplies and Dis posal invited tenders for the supply of tents and the appel lant firm submitted its tender, which was accepted. The said contract was of two kinds of tents viz, "Flies Inner" and "Flies Outer", the agreed rate of the latter was Rs.225 per tent and the quantity was 15,000. As per the terms of the contract, the goods were to be inspected at the premises of the appellant firm and after inspection the same were to be despatched to Commandant, C.O.D., Kanpur. As regards the mode of payment of the price of the goods, 95% of the price was to be paid on proof of despatch of goods and production of inspection note, and 5% latter. On October 14, 1968 one consignment of 1500 tents was despatched to C.O.D. Kanpur from Jodhpur by the appellant under Railway Receipt No. 502671 and 95% of the price was paid to the appellant. The commandant, C.O.D. Kanpur, the consignee reported that 224 tents out of the said sale consignment had not been received at Kanpur and for that reason a sum of Rs.51,912 being the price of 224 tents was deducted from the amounts due to the appellant, under anoth er contract. The Traffic Officer, Commandant C.O.D. had filed a claim with the railways for short delivery of 224 tents. Despite repeated requests by the appellant for the payment of the said amount, the same was not paid to it. As such the appellant filed a suit in Delhi High Court for the recovery of the principal amount as also for the interest thereon. In the suit, the appellant also claimed interest on two other consignments, as its balance price i.e. 5% amount ing to Rs.24,357 was paid after a delay of 3 years and thus a sum of Rs.8,525 was claimed as interest @ 12% per annum from 1.1.69 to 1.12.71. Thus the total claim was of Rs.74.972. 128 The defence of Respondents 1, 2 & 5 was that 224 tents were received short and as such a sum of Rs.51,912 its price was rightly deducted from the appellant 's bill. Respondents 3 & 4 (Railways ' Officials) filed a State ment that only 11 tents were delivered short for which the admitted liability was Rs.2,475, the same having been paid to C.O.D. Kanpur by debit adjustment. The Trial Judge by his Order dated February 12, 1982 dismissed the claim of the appellant substantially but so for as the amount of Rs.2,475 regarding the shortage of 11 tents was concerned, the same was decreed with interest. Against the Judgment and Order of the Trial Judge, the appellant preferred an appeal before the Division Bench of the High Court and the same having been dismissed, the appellant has come up in appeal to this Court after obtain ing Special Leave. Allowing the appeal, this Court, HELD: In view of the terms and conditions of the con tract embodied in clause 11 of the schedule of acceptance of tender regarding the place of delivery "F.O.R. Jodhpur", the property in the goods passed immediately on to the seller after delivering the goods and loading the same in the railway wagons at Jodhpur for transmission to the buyer, the consignee, without reserving any right of disposal. [136D] On consideration of the place of delivery as well as the terms of delivery embodied in clause 11 of the schedule of Acceptance of Tender, the property in the goods alongwith the risk in the goods passed from the appellant to the Respondent No. 5 when the goods were delivered and dis patched by railway wagons at Jodhpur i.e. F.O.R. Jodhpur. The consignee, Commandant, C.O.D. Kanpur is, therefore, liable for the price of 224 tents which was deducted by him from the other bills of the appellant. [137A B] The plaintiff is entitled to get a decree of interest on the price from 1.1.69 to 1.12.1971 @ 6% per annum which is considered to be a reasonable rate of interest as claimed by the plaintiff appellant. [139C] Girija Proshad Pal vs The National Coal Co. Ltd., AIR 1949 Cal. 472; The Commissioner of Sales Tax, Eastern Divi sion, Nagpur vs 129 Husenali Adamji & Co., [1959] 2 Supp. SCR 702; B.B. Bose vs National Coal Trading Company, AIR 1966 (Patna) 346 and M/s. M.K.M. Moosa Bhai Amin, Kota vs Rajasthan Textile Mills, Bhawanimandi, Raj. L.W. 77, referred to.

Appeal No. 1104 of 1970. Appeal by special leave from the judgment and order dated April 9, 1970, of the Rajasthan High Court in D. B. Civil Special Appeal No. 126 of 1970. M. C. Chagla, F. section Nariman, P. N. Tiwari and O. C. Malther, for the appellant. M. C. Setalvad and B. P. Maheshwari, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal from a judgment of the Rajasthan High Court holding that the appellant was not entitled to file an appeal against the order of the Company Judge directing sale of lease hold rights of the Golcha Properties (P) Ltd. (in liquidation) in the land belonging to the appellant. The facts briefly are that on November 5, 1960 an agreement was entered into between the appellant and the respondent company allowing Golcha Properties (P) Ltd. to construct a cinema threatre within three years from the issue of the 'No Objection Certificate ' on land measuring 42,900 sq. feet at Bhagwandas Road, Jaipur belonging to the appellant. The Company deposited a sum of Rs. 5 lakhs by way of security. In October 1963 No Objection Certificate is stated to have been issued for construction of a cinema theatre. In 1966 a petition for winding up of the company was filed in the Rajasthan High Court. On May 10, 1968 an order for winding up of the company was made and a liquidator was appointed ' On July 11, 1969 the Official Liquidator made a report to the Company Judge for sale of the lease hold rights of the company in the land belonging to the appellant and the structures standing on it. It appears that the Official, Liquidator made a report under section 457 of the Indian to obtain the necessary orders for sale. On July 21, 1969 the Company Judge without hearing any one or issuing notice to the appellant ordered that the lease hold rights and the structures be auctioned as proposed by the Official Liquidator On October 3,1969 the appellant 's attorney sent a letter to the Official Liquidator stating that the licence granted to the company under, an. agreement dated November 5, 1960 stood revoked and called upon him to deliver possession of the land and also pay compensation amounting to Rs. 10, lakhs. On February 9, 1970 the Official Liquidator sent a reply claiming that the company was entitled to a lease for 20 years under the agreement. On March 14, 1970 a notice was issued in a newspaper (Times of India) in respect of the proposed auction sale ,of lease hold rights which was to take place on April 14, 1970. 249 According to the appellant she enquired from the Official Liquidator under whose authority the, property was being sold to which no reply was sent by the Official Liquidator. On April 3, 1970 the appellant applied for a certified copy of the order dated July 21,1969 after taking inspection of the record in the High Court. The certified copy was sent on April 24, 1970. On the same date the appellant filed an appeal before the High Court. The High Court rejected that application summarily but recorded short order. In the order of the High Court reference has been made to Rule 139 of the Companies (Court) Rules 1959 and it has been pointed out that since the appellant had not appeared before the Company Judge she was not entitled to maintain the appeal. It was conceded that no notice had ever been sent to her either by the Official Liquidator or the Company Judge before the order appealed against relating to appellant 's property was made. The High Court was of the view that the only remedy of the appellant was by way of a suit after obtaining leave of the Company Judge under section 446 of the Act. Now an appeal lies under section 483 of the Act from any order made or decision given in the matter of finding up of a company by the court and it lies to the same court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or deci sion of the Court in cases within its ordinary jurisdiction. There can be no manner of doubt that an appeal was competent against the order made by the Company Judge on July 21, 1969 in view of the terms of section 483. The only question is whether because the Official Liquidator failed to discharge his duties properly by having a notice issued to the appellant, whose rights were directly affected by the order proposed to be made, the appellant was debarred from filing the appeal. In our opinion apart from Rule 139 to which reference has been made by the High Court the Official Liquidator as well as the learned Company Judge were bound by the rules of natural justice to issue a notice to the appellant and hear her before making the order appealed against. If there was default on their part in not following the correct procedure it is wholly incomprehensible how the appellant could be deprived of her right to get her grievance redressed by filing an appeal against the order which had been made in her absence and without her knowledge. It would be a travesty of justice if a party is driven to file a suit which would involve long and cumbersome procedure when an order has been made directly affecting that party and redress can be had by filing an appeal which is permitted by law. It is well settled that a person who is not a party to the suit may prefer an appeal with the leave of the appellate court and such leave should be granted if he would be prejudicially affected by the judgment. 250 Rule 103 of the Companies (Court) Rules provide for taking out summons for directions not only with reference to the settlement of the list of contributories and the list of creditors but also the axercise by the Official Liquidator of all or any of the powers under section 457(1) and any other matter requiting directions of the court. The exercise of the power under section 457 (1) (c) of the Act to sell the immovable and movable property of the Company by public auction or private contract would certainly fall Within the ambit of the Rule. That Rule expressly provides for issuing of a notice of the summons to the petitioner on whose petition the order for winding up was made. It is implicit that if the directions which have to be given by the court would affect any person prejudicially he: must be served with a notice of the summons under the general rule of natural justice and that no order should be made affecting the rights of a party without affording a proper opportunity to it to represent its case. The High Court was thus clearly in error in not entertaining and deciding the appeal preferred by the appellant who was the owner of the land in which lease hold rights said to have been created by her in favour of the Company in liquidation were sought to be sold. The appeal is allowed and the order of the High Court is set aside. The case is remanded to the High Court for disposing of the appeal in accordance with law. Costs shall abide the event. Y.P. Appeal allowed.

The respondent company holding leasehold rights in the appellant land went into liquidation. Accepting the. official liquidator 's report the company Judge (Rajasthan High Court) without hearing anyone or issuing notice to the appellant ordered auction of the lease hold right of the respondent company. The appellant sent a letter to the Official Liquidator revoking the licence granted to the company and calling upon him to, deliver possession of the land. The Official Liquidator claimed that the company was entitled to a further period of lease under the agreement. Notice was issued in respect of the proposed auction sale. The appellant filed an appeal before the High Court. The High Court held that since the appellant had not appeared before the company Judge, she was not entitled to maintain the appeal, and further that the only remedy of the appellant was by way of a suit after obtaining leave of the Company Judge under section 446 of the Indian Companies Act. In appeal to this Court, HELD : The High Court was in error in not entertaining and deciding the appeal preferred by the appellant who was the owner of the land in which lease hold rights said to have been created by her in favour of the company in liquidation were sought to be sold. An appeal lies under section 483 of the Act from any order made or decision given in the matter of winding up of a company by the Court and it lies to the same, court to which, in the same manner in which, and subject to the same conditions under which appeals lie from any order or decision of the Court in cases within its ordinary jurisdiction. Therefore an appeal was corn tent against the order of the company Judge. [249 D] It is implicit in Rule 103 of the Company Court Rules that if the directions which have to be given by the Court would affect any person prejudicially he must be served with a notice of the summons under the general rule of natural justice and that no order should be made affecting the rights of a party without affording a proper opportunity to it to represent its case. A] Further, the Official Liquidator as well as the, learned company Judge were bound by the rules of natural justice to issue a notice to the appellant and hear her before making the order appealed against. If there was default on their part in not following the correct procedure the appellant could not be deprived of her right to get her grievance redressed by filing an appeal. [250 C] 248

Civil Appeal No. 2613 of 1983. From the Judgment and order dated 19 11 82 of Allahabad High Court in Civil Misc. Writ No. 8287 of 1982. R.K Garg, S.N. Singh and D.K. Garg, for the appellant. P.R. Mridul, Miss A. Subhashini, R.N. Poddar, C.V. Subba Rao and A.K. Ganguli for the respondents. The judgment of the Court was delivered by CHANDRACHUD, C.J. The appellant was working as a senior clerk in the office of the Chief Commercial Superintendent, Northern Railway, Varanasi. On May 22, 1982 the Senior Commercial officer wrote a letter to him, calling upon him to offer his explanation in regard to 12 charges of gross indiscipline. The appellant submitted his explanation to the charges by his reply dated June 9, 1982. On the very next day, the Deputy Chief Commercial Superintendent served a second notice upon the appellant, saying that the explanation offered by him was not convincing but that another chance was being given to him to offer his explanation regarding the specific charges which were conveyed to him by the letter of May 22, 1982. By this letter, the appellant was also called upon to submit his explanation within three days as to why deterrent disciplinary action should not be taken against him. The appellant submitted his further explanation on June 14, 1982, but on the very next day, the Deputy Chief Commercial Superintendent passed an order dismissing him from service on the ground that he was not fit to be retained in service. The appellant filed a writ petition in the High Court of Allahabad challenging the order of dismissal on various grounds. The Union of India, the Senior Commercial officer and the Deputy Chief Commercial Superintendent were impleaded to that petition 305 as Respondents 1 to 3. That writ petition having been dismissed by the High Court, the appellant has filed this appeal by special leave. The order dismissing the appellant from service was passed by Respondent 3 under Rule 14(ii) of the Railway Servants (Discipline and Appeal) Rules, 1968 read with Proviso (b) to Article 311(2) of the Constitution. Respondent 3 recorded his reasons in writing for coming to the conclusion that it was not reasonably practicable to hold an inquiry into the conduct of the appellant in the manner provided by the relevant rules, and thereafter, he proceeded to pass the order of dismissal without holding any inquiry. Quite some time was taken by the appellant 's counsel in arguing upon the true meaning and intendment of the Discipline and Appeal Rules, 1968 and in urging that the appellant should have been afforded an opportunity of being heard on the question as to whether, it was or was not reasonably practicable to hold an inquiry into the charges levelled against him. It was also urged by the learned counsel that the fact that it was not reasonably practicable to hold a full fledged inquiry as contemplated by the Rules, did not justify the non holding of any inquiry at all. We do not propose to enter into the merits of these contentions since, the appellant is entitled to succeed on another ground. The letter dated May 22, 1982 which contains accusations of gross misconduct against the appellant enumerates 12 charges, out of which Charges Nos. 2 to 7 and 11 refer to the appellant 's misconduct in relation to Respondent 3. For example, the second charge alleges that the appellant entered the office of Respondent 3 and challenged him in an offensive and derogatory language. Charge No. 3 says that the appellant was in the habit of forcing himself on Respondent 3 two or three times every day with petty complaints. Charge No. 4 alleges that the appellant stormed into the office of Respondent 3 and shouted at him, using foul words. Charges 5, 6 and 7 contain similar allegations. The allegation contained in Charge No. 11 is to the effect that behaving as a leader of goondas, the appellant hired the services of other goondas and created security problems for Respondent 3 and the members of his family. It is obvious that if an inquiry were to be held into the charges framed against the appellant, the principal witness for the Department would have been Respondent 3 himself as the main accuser and the target of appellant 's misconduct. It is surprising in this context that the 306 explanation dated June 9, 1982 which was furnished by the appellant to the letter of accusation dated May 22, 1982 was considered on its merits by Respondent 3 himself. Thereby, the accuser became the judge. The letter written to the appellant by Respondent 3 on June 10, 1982 says: "I have carefully gone through your defence explanation dated 9.6.82. to the charges given in this office letter of even No. dated 22.5.82 and the same is not convincing at all. Before taking any action under D. & A.R., I would like to offer you another chance for giving your explanation to the specific charges conveyed to you vide this office letter dated 22.5.82. Please submit your defence explanation within three days as to why a deterrent disciplinary action should not be taken against you". The appellant submitted his further explanation, which also was considered by Respondent 3 himself. The order of dismissal dated June 15, 1982 which was issued by Respondent 3 recites that he was fully satisfied that it was not reasonably practicable to hold an inquiry into the appellant 's conduct as provided by the Rules and that he had come to the conclusion that the appellant was not fit to be retained in service and had, therefore, to be dismissed. Evidently, Respondent 3 assessed the weight of his own accusations against the appellant and passed a judgment which is one of the easiest to pass, namely, that he himself was a truthful person and the appellant a liar. In doing this, Respondent 3 violated a fundamental principle of natural justice. The main thrust of the charges against the appellant related to his conduct qua Respondent 3. Therefore, it was not open to the latter to sit in judgment over the explanation offered by the appellant and decide that the explanation was untrue. No person can be a judge in his own cause and no witness can certify that his own testimony is true. Any one who has a personal stake in an inquiry must keep himself aloof from the conduct of the inquiry. The order of dismissal passed against the appellant stands vitiated for the simple reason that the issue as to who, between th 307 appellant and Respondent 3, was speaking the truth was decided by Respondent 3 himself. In The State of Uttar Pradesh vs Mohammad Nooh, 1 S.R. Das, C.J., observed, while speaking for the majority, that the roles of a judge and a witness cannot be played by one and the same person and that it is futile to expect, when those roles are combined that the judge can hold the scales of justice even. We may borrow the language of Das, C.J., and record a finding on the facts of the case before us that the illegality touching the proceedings which ended in the dismissal of the appellant is "so patent and loudly obtrusive that it leaves an indelible stamp of infirmity" on the decision of Respondent 3. Mr. Mridul, appearing on behalf of the respondent, contended ' that though this may be the true legal position, the appellant does not deserve the assistance of the Court since, he was habitually guilty of acts subversive of discipline. This argument does not impress us. In the first place, to hold the appellant guilty of habitual acts of indiscipline is to assume something which remains unproved. Secondly, the illegality from which the order of dismissal passed by Respondent 3 suffers is of a character so grave and fundamental that the alleged habitual misbehaviour on the part of the appellant cannot cure or condone it. In the result, we allow the appeal and set aside the judgment of the High Court. The order dated June 15, 1982 whereby the appellant was dismissed from service is set aside. In order, however, to avoid needless complications in working out the mutual rights and obligations of the parties, we direct that the appellant, who is due to retire within about six months, shall be treated as having retired from service with effect from April 1, 1984. He shall be paid the arrears of his salary due until March 31, 1984 on the basis of the salary last drawn by him on June 15, 1982, without taking into account the increments which he might have earned subsequent to that date. The provident fund and gratuity shall also be paid to the appellant as calculated in accordance with the rules, as if no order of dismissal was passed against him. The appellant may 308 not and shall not rejoin his duties. He will be treated as on leave between now and March 31, 1984. The arrears of salary until March 31, 1984 shall be paid to the appellant on the basis indicated above, on or before that date and, in any event, not later than May 1, 1984. The provident fund and gratuity shall be paid to him within a period of two months from today. Mr. Garg made a statement before us on behalf of his client, the appellant, that the appellant is neither in occupation of any official residential accommodation, nor is he in possession of the garage which is referred to in Charge No. 6 in the letter of May 22, 1982. The appeal will stand disposed of in terms of the above order. Respondent 1, the Union of India, shall pay to the appellant a sum of Rs. 1,000/ (Rupees one thousand) as his costs. S.R. Appeal allowed.

The appellant was working as a senior clerk in the office of the chief Commercial Superintendent. Northern Railway, Varanasi on May 22, 1982, the senior Commercial officer wrote a letter to him calling upon him to offer his explanation in regard to twelve charges of gross indiscipline, mostly relating to the Deputy Chief Commercial Superintendent. The appellant submitted his explanation to the charges by his reply dated June 9, 1982. On the very next day, the Deputy Chief Commercial Superintendent served a second notice upon the appellant saying that the explanation offered by him was not convincing but that another chance was being given to him to offer his explanation regarding the specific charges which were conveyed to him earlier. By this letter, the appellant was also called upon to submit his explanation within three days ' as to why deterrent disciplinary action should not be taken against him. The appellant submitted his further explanation on June 14, 1982, but on the very next day, the Deputy Chief Commercial Superintendent passed an order dismissing him from service on the ground that he was not fit to be retained in service. The appellant filed a writ petition in the High Court of Allahabad challenging the order of dismissal on various grounds. The writ petition was dismissed and hence the appeal special leave of the Court. Allowing the appeal, the Court. ^ HELD: 1: 1. The order of dismissal passed against the appellant stands vitiated for the simple reason that the issue as to who, between the appellant and Respondent No. 3 (the dismissing authority) was speaking the truth was decided by Respondent No. 3. The main thrust of the charges against the appellant related to his conduct qua Respondent 3. Therefore, it was not open to the latter to sit in Judgment over the explanation offered by the appellant and decided that the explanation was untrue. No person can be a judge in his own 303 cause and no witness can certify that his own testimony is true. Any one who has a personal stake in an enquiry must keep himself aloof from the conduct of the inquiry. [306 F H] 1: 2. On the facts of the case, the illegality touching the proceedings which ended in the dismissal of the appellant is "so patent and loudly obtrusive that it leaves an indelible stamp of infirmity" on the decision of Respondent No. 3. [307 B C] 2. From the charges 2 to 7 and 11, it is obvious that if an enquiry were to be held into the charges framed against the appellant, the principal witness for the Department would have been Respondent No. 3 (the dismissing authority) himself as the main accuser and the target of appellant 's misconduct. Surprisingly, the explanation dated June 9, 1982 of the appellant to the letter of accusation dated May 22,1982 was considered on its merits by Respondent himself. Thereby, the accuser became the Judge. [305 G H, 306 A] Not only that, the further explanation submitted by the appellant was considered by Respondent No. 3 himself. The order of dismissal dated June 15, 1962 which was issued by Respondent No. 3 recites that he was fully satisfied that it was not reasonably practicable to hold an inquiry into the appellant 's conduct as provided by the Rules and that he had come to the conclusion that the appellant was not fit to be retained in service and had, therefore, to be dismissed, Evidently, Respondent 3 assessed the weight of his own accusations against the appellant and passed a judgment which is one of the easiest to pass, namely, that he himself was truthful person and the appellant a liar. In doing this Respondent No. 3 violated a fundamental principle of natural justice. [305 B C, 306 F] The State of U.P. vs Mohammad Nooh ; , referred to. The contention that inspite of the above legal position, the appellant does not deserve the assistance of the court, since he was habitually guilty of acts subversive of discipline cannot be accepted. In the first place, to hold the appellant guilty of habitual acts of indiscipline is to assume something which remains unproved, Secondly, the illegality from which the order of dismissal passed by Respondent No. 3 suffers is of a character so grave and fundamental that the alleged habitual misbehaviour on the part of the appellant cannot cure or condone it. [307 C E] 4. The aviod needless complications in working out the mutual rights and obligations of the parties, the court directed: (i) The appellant who is due to retire from service shall be treated as having retired from service with effect from April 1, 1984: (ii) He shall be paid arrears of salary due until March 31, 1984 on the basis of salary last drawn by him on June 15, 1982 without taking into account the increments which he might have earned subsequent to that date: 304 (iii) The Provident Fund and gratuity shall also be paid to the appellant as calculated in accordance with the rules, as if no order of dismissal was passed against him; and (iv) he may not and shall not rejoin his duties and he will be treated as on leave between 23rd March, 1984 and 31st March, 1984. [307 F H, 308 A B]

Appeal No. 716 of 1957. Appeal from the judgment and decree dated July 29, 1955, of the former Bombay High Court in Appeal No. 50 of 1953 under the Letters Patent against the judgment and decree dated September 3, 1953, of the said High Court in First Appeal No. 547 of 1952. H. N. Sanyal, Additional Solicitor General of India, T. V. R. Tatachari and M. section K. Sastri, for the appellants. Purshottam Trikamdas, H. R. Gokhale and R. Gopalakrishnan, for the respondent. October 28. The Judgment of Jafer Imam and Raghubar Dayal, JJ., was delivered by Jafer Imam, J. A. K. Sarkar, J., delivered a separate judgment. IMAM J. This is an appeal against the judgment of a Division Bench of the Bombay High Court in Letters Patent Appeal No. 50 of 1953, reversing the decision of Shah, J. and restoring the order passed by the executing court which had been set aside by him. Two Questions arise for decision in this appeal (1) whether the Wada (house) ordered to be attached by the executing court is Watan property, and if so, can 165 it be attached in execution of a decree ? (2) If the Wada is not Watan property, is it exempted from attachment by virtue of the provisions of section 60 of the Code of Civil Procedure ? It is necessary now to state a few facts. One Rao Ba. Vithalrao Laxmanrao Thube, hereinafter referred to as Laxmanrao, brought Civil Suit No. 313 of 1943 against Tuljaramarao Narainrao Desai, hereinafter referred to as Tuljaramarao, to recover Rs. 80,000 which had been borrowed by him from the plaintiff. Laxmanrao 's suit was decreed on December 20, 1943. Tuljaramarao having died his legal representatives, the present appellants, were brought on the record on September 21, 1944. In April, 1949, Laxmanrao filed an application for the execution of the decree. He sought the attachment, with a view to their subsequent sale, of certain properties including the Wada which is the subject matter of this appeal. The appellants objected to the proposed attachment on various grounds. The executing court on December 17, 1951, issued a warrant of attachment only against the Wada in question. The appellants appealed to the Bombay High Court. Their appeal was heard by Shah, J., who by his order dated September 23, 1953, set aside the order of attachment relying on the decision of Chagla, J., in second Appeal No. 760 of 1942. He, however, gave no decision on the question whether section 60 of the Code of Civil Procedure gave protection to the Wada from attachment. Against the decision of Shah, J., there was an appeal under the Letters Patent of the High Court which was heard by a Division Bench. The Division Bench, as already stated, reversed the decision of Shah, J. and restored the order made by the executing court. Subsequently, the High Court gave a certificate that the case was a fit one for appeal to this Court. It is undisputed that the whole of village Nandi had been granted as inam to the ancestor of Tuljaramarao and his descendants as per Sanad, Ext. 54, and the Inam Patrak, Ext. In that Sanad there is no mention of any Wada existing on the Inam land. According to the executing court the Wada 166 appears to have been built after the grant. It appears that the opinion of the Division Bench of the High Court was also to the same effect. There is no finding of Shah, J., to the contrary. We must, therefore, proceed on the basis that the Wada in question was not the subject of the original grant. This Wada came to be constructed on the land in the inam village of Nandi sometime subsequent to the grant. "What has to be decided is, do the attributes of Watan Property " accrue to the Wada which was constructed after the grant on land which was admittedly " Watan Property " as defined by the Bombay Hereditary Offices Act, 1874 (Bombay Act No. III of 1874), hereinafter referred to as the Act. In appeal No. 760 of 1942, Chagla, J., took the view that the house in that case was an accession to the site on which it stood. Accordingly, it must partake of the character of the land on which it stood. The learned Judge stated that the question which he had to determine was whether the house was immovable property held for the performance of the duty appertaining to an hereditary office within the meaning of section 4 of the Act. Having regard to the definition of " immoveable property " in the Bombay General Clauses Act he was of the opinion that the house certainly formed part of the immoveable property which was held for the performance of the duty appertaining to the hereditary office of the Watan and that the only answer to the question " what is the immoveable property which is held for the performance of the duty under section 4?" can be both the land and the house. If the house forms part of the immoveable property it is not possible to sever the two and to say that it is only the land which is Watan property and not the house which is permanently fastened to it. Shah, J., relied upon the decision of Chagla, J., and held that the land on which the Wada in the present case stood, being Watan property, the Wada must also be deemed to have acquired that character. The Division Bench which heard the appeal against the decision of Shah, J., was of the opinion that although a house 167 built on land must be regarded as immoveable property it did not follow that like the land on which it was built the house became Watan property. The fact that a house subsequently built became immoveable property would have no material bearing on the question whether it was Watan property or not. In order that the house may be regarded as Watan property it must satisfy the test laid down by the definition of the word " Watan Property " in section 4 of the Act and that if the word " held " was construed in the way in which the learned Judges of the Division Bench thought it should be, it would be difficult to accept the view that a house subsequently built by a watandar on a part of the Watan land could be said to be held by him for the performance of his duties of a hereditary office. The learned Judges of the Division Bench accordingly were of the opinion that Shah, J., erred in so holding. " Watan Property " has been defined in the Act to mean: " The moveable or immoveable property held, acquired, or assigned for providing remuneration for the performance of the duty appertaining to an hereditary office. It includes a right to levy customary fees or perquisites, in money or in kind, whether at fixed times or otherwise. It includes cash payments in addition to the original watan property made voluntarily by the State Government and subject periodically to modification or withdrawal. " The inam lands of Nandi were undoubtedly held as remuneration for the performance of the duty appertaining to an hereditary office and therefore were Watan properties. On the findings of the courts below the Wada in question was not the subject of the grant. In our opinion, therefore, at no time was it held for providing remuneration for the performance of the duty appertaining to a hereditary office. Nor could it be said to have been acquired for performance of any such duty. It had been constructed some time subsequent to the grant either by the grantee or his descendants and there is no indication on the record 168 that it was constructed for the purpose of providing remuneration for the performance of the duty appertaining to a hereditary office. To that extent at least it appears to be clear that the Wada in question does not come within the definition of Watan property as defined in the Act. The only question is whether having been constructed on land which is Watan property and being immovable property within the meaning of the Bombay General Clauses Act, does it partake of the character of the land on which it stood ? On behalf of the appellants it was argued that the Wada is an accession to the Watan property, namely, the land of village Nandi. It seems to us, however, that construction of a Wada on land which is Watan property is not an accession to it, as accession to the land would suggest that over a course of years imperceptible accretion to the land has taken place and it was impossible to distinguish the original land from the accreted land. In such a case the accreted land may possibly partake of the character of the original land. Adjacent lands to the original land which have been acquired and can be distinguished cannot partake of the character of the original land. On behalf of the appellants it was argued that the right, title and interest of the grantor had to be looked at first in construing a grant and if it appeared from the terms thereof that it did not contain any reservation or exception then all the rights, title and interest of the grantor which he was capable of granting would pass to the grantee. The grantor in this case was the Government which could have built a construction on the land granted or dug tube wells on it. The grantee, therefore, could also build a house or any other structure on the land. On the other hand, it was contended on behalf of the respondent that the position of a watandar was not that of an absolute owner of the land. He held the land on certain conditions. The land was liable to forfeiture if he was guilty of certain acts mentioned in section 60 and Schedule 11 of the Act. We will assume, there being nothing to the contrary in the Sanad, that the grantee was not restricted from constructing a building on the land. From that, 169 however, it does not necessarily follow that the building so constructed became Watan property within the meaning of the Act. If the Government could have built a construction on the land it could also have dismantled it and removed the material with which it was made. Similarly, the grantee could do so, there being no restriction in that regard in the terms of the Sanad. It seems to us that on a proper construction of the Sanad there was no impediment in the way of the grantee from dismantling the house which he had built and removing the materials with which it had been constructed and selling the same. Indeed, unless it is held that a house constructed on the land partakes of the character of the land, it is difficult to see how the grantee is prevented from selling or mortgaging it but not the land on which it stood. It seems to us, therefore, that the Wada in the present case although immovable property did not partake of the character of the land on which it was constructed because it was severable from the land and was capable of being dismantled and the materials of which could be removed and sold without violating any of the provisions of the Act. In our opinion, the decision of the Division Bench of the High Court that the Wada was not Watan property appears to be correct. The next question for consideration is whether the Wada is one belonging to an agriculturist and occupied by him within the meaning of cl. (c) of the proviso to section 60(1) of the Code of Civil Procedure. If it is, then it is exempted from attachment by the provisions of the proviso. It was urged that as the word " agriculturist " has not been defined in the Code, the word must be construed according to its ordinary meaning. According to Shorter Oxford English Dictionary this word can also mean a farmer. Neither the extent of the land farmed by him nor the amount of income derived by him from cultivating the land was a relevant consideration in construing the word ".agriculturist "Nor would it be right to restrict the meaning of the word " agriculturist " to mean that an agriculturist must be a person who himself or by the aid 170 of the members of his family tills the land and not with the aid of employed labour. On behalf of the respondent, however, it was contended that the word "agriculturist " in el. (c) of the proviso must bear the same meaning as the word " agriculturist " in cl. (b) of the proviso. It was necessary, therefore, to construe the provisions of cl. (b) as well in order to under. stand what the Code intended the word " agriculturist " to mean in cl. On a proper construction of el. (b) not only an agriculturist must be the tiller of the land but he must also be a small agriculturist. Clause (b) was not intended to refer to a person who cultivated a large area of land and derived from it a large income. It was pointed out that in the present case the appellant Appasaheb was cultivating a very large area of land with the aid of employed labour and derived an income somewhere between Rs. 30,000 to 35,000 a year. Section 60(1) of the Code states in detail what property of a judgment debtor is liable to attachment and sale in the execution of a decree. It was urged that but for the proviso all the properties of Tuljaramarao other than Watan property were liable to attachment and sale in execution of Laxmanrao 's decree. The proviso no doubt exempted from attachment and sale certain properties mentioned therein but cl. (b) of the proviso clearly indicated that the object of the Code was to save in the case of a judgment debtor his tools as an artisan and, where he was an agriculturist, his implements of husbandry and such cattle and seed grains as may, in the opinion of the court, be necessary to earn his livelihood. It did not even exempt his agricultural produce unless there was a notification under section 61 of the Code specifying by a general or special order how much of the agricultural produce was, in the opinion of the State Government, necessary for the purpose of providing, until the next harvest, for due cultivation and the support of the judgment debtor and his family. It was suggested, therefore, that the Code intended to exempt from attachment and sale, in the case of an agriculturist, only that much which was necessary to enable him to earn his livelihood as such. 171 interpreted by various High Courts in India. Reference to only some of these cases need be made. In the case of Hanmantrao Annarao vs Dhruvaraj Pandurangrao (1) it was held by the Bombay High Court that the word " agriculturist " in cls. (b) and (c) of the proviso to section 60(1) of the Code of Civil Procedure denotes persons who are personally engaged in tilling and cultivating the land and whose livelihood depends upon the proceeds of such tillage and cultivation of the soil. It does not include large landed proprietors even though they may be tilling the land and cultivating it through their servants. In the case of Parvataneni Lakshmayya vs The Official Receiver of Kistna (2) a Full Bench of the Madras High Court arrived at the following conclusion after considering various decisions of some of the High Courts in India: " We think that, having regard to the scheme of the section exempting from attachment, as it does, tools of artisans, and, where the judgment debtor is an " agriculturist " his implements of husbandry and such cattle and seed grain as may in the opinion of the Court be necessary to enable him to earn his livelihood, and his houses and other buildings occupied by him, protection is intended to be given to those who are real tillers of the land, and that an " agricul turist " in the section is a person who is really dependent for his living on tilling the soil and unable to maintain himself otherwise. Main, chief, or principal sources of income are not, in our view, the proper tests. A man 's main source of income may be from tilling the soil but his other source or sources of income may be more than sufficient to maintain him. The fact that a man 's income from tilling the soil may be larger than his income from his ownership of land or other sources does not seem to us to make him an " agriculturist" within the meaning of the section. At the same time we see no reason for depriving an " agriculturist " of the exemption under the section because he may have invested money in a business or businesses as alleged in the present case and may (1) (1946) 49 B.L.R.867. (2) I.L.R. 172 derive some income therefrom or do coolie work and add to his earnings in bad times. The test of sole source of income if applied would deprive him of the benefit of the section and we prefer the tests which we have already laid down, viz., that he must be a tiller of the Boil really dependent for his living on tilling the soil and unable to maintain himself otherwise. " in the case of Tirloki Prasad vs Kunj Behari Lal (1) the Allahabad High Court held that the test to be applied in deciding whether a person is an agriculturist is whether his main source of income is derived from cultivation or not. In the case of Dwarka Prasad vs Municipal Board, Meerut (2) the same High Court held that there was no reason for holding that cl. (b) of the proviso to section 60(1) applied only to the case of very small farmers and not to the case of large farmers. Clause (b) aimed at protecting the implements of every farmer so as to enable him to continue to earn his livelihood in the same way as he had been doing previously. There was nothing to indicate that the clause was limited to small farmers. In the case of Gowardhandas vs Mohanlal (3) the conclusions of the Nagpur High Court were: "(i) Whether a person is an agriculturist or not is not a question turning on source of income but on nature of occupation. (ii) A person may have many occupations. If one of them is agriculture and for that purpose a house or building is occupied, protection can be claimed. (iii) A person who owns land and lets it reserving either money or produce is not an agriculturist but a landlord. (iv) A person who cultivates the land as a labourer, though neither a landowner nor a tenant, is an agriculturist. (v) If a man cultivates the land with his own hands or by means of labourers whose activities he directs he is an agriculturist whether he operates on a large or a small scale. If he has no connection with (1) A.I.R. 1935 All. 448. (2) A.I.R. 1958 All. (3) I.L.R. 173 the land except that he owns it and people work for him, he may or may not be an agriculturist according to circumstances. " In the case of Nihal Singh vs Siri Ram (1) the Lahore High Court held that the word "agriculturist " means a person who personally engages in the occupation of tilling the soil and derives his livelihood from that occupation and cannot (or does not) maintain himself from other sources. On the facts of the case that Court held that a man who merely received rent from tenants or the income of the produce derived by the employment of servants or partners could not be said to depend for his livelihood upon the proceeds derived from so engaging himself in the tillage of the soil. In the case of Anantalal vs Bibhuti (2) the Patna High Court held that an agriculturist was one who tilled the soil and thereby earned his livelihood and was expected to have implements of husbandry, cattle and seed grain. This, however, did not mean that he must till the land with his own hands or that he must necessarily have his own implements of husbandry. In any event, cultivation must be his main source of income though this would not be the sole test. The question whether a person was an agriculturist or not would have to be decided with reference to the facts of each particular case. In the present case the evidence of the appellant 's own witness, Balaji, shows that Tuljaramarao had reserved some lands for a home farm about 8 years before his death. The area reserved was about 35 acres and that he maintained about 12 bullocks and 8 servants. He was getting an income of Rs. 20,000 to Rs. 25,000 a year from these lands. He used to keep his cattle in the Wada where his servants also stayed and his agricultural implements were kept. The pro duce of the lands was also stored in the Wada. Tuljaramarao used to supervise the agricultural operations and his servants. After his death his son appellant Appasaheb became the owner. Appasaheb increased the acreage of the cultivation of the home farm to about 60 acres. He has 14 bullocks and 10 (1) Lah.23. (2) Pat. 348. 174 or 12 servants and the income is Rs. 30,000 to Rs. 35,000 a year. The cattle and the produce are kept in the Wada where he also resides. This witness also stated that the appellant Appasaheb had inams in 4 villages. Furthermore, in 10 or 12 villages he owns lands and he gets about Rs. 35,000 to Rs. 40,000 from his lands. The said Appasabeb and his brother sometimes worked personally in the fields. It is clear, from this evidence, that Appasaheb is by no means entirely dependent for his livelihood upon the income from the home farm. Apart from the income of the home farm he has a substantial income from other lands and there is nothing to show that this income derived from his other lands is the result of cultivation by him. It was contended on behalf of the appellants that the Bombay High Court had taken an extreme view in the case of Hanmantrao Annarao vs Dhruvaraj Pandurangrao (1). Reliance was placed on the decision of the Allahabad High Court in Dwarka Prasad vs Meerut Municipality (2) where it was held that a tractor was an implement of husbandry and it was not subject to attachment although it was used for cultivating an area of about 1,200 bighas of a farm. The decisions of the Madras High Court in the case of Parvataneni Lakshmayya vs The Official Receiver of Kistna (3), of the Lahore High Court in the case of Nihar Singh vs Siri Ram and Others (4) and of the Nagpur High Court in the case of Gowardhandas vs Mohanlal (5) were also relied upon on behalf of the appellants in order to show that to be an agriculturist a person did not have to personally cultivate the land and that it was immaterial whether the area cultivated or the income derived therefrom was large or small. The real test was, was the cultivation his main source of livelihood ? It was submitted, on the facts of the present case, that the appellant Appasaheb depended for his livelihood on the income derived from the land cultivated by him and that the Wada (1) (2) A.I.R. 1958 All. 561 (3) I.L.R. (4) Lah. (5) I.L.R. 175 on the land was occupied by him as an agriculturist for the purpose of his cultivation. Such being the position the Wada was occupied by him as an agriculturist and was therefore exempted from attachment under cl. (c) of the proviso to section 60(1) of the Code of Civil Procedure. Sub section (1) of section 60 of the Code of Civil Procedure makes all saleable property, movable and immovable, belonging to the judgment debtor and over which he has a disposing power liable to attachment and sale in execution of a decree against him. In this subjection unless the terms of the proviso came to the rescue of the judgment debtor, all lands and houses or other buildings, goods and money, amongst other things, belonging to him would be liable to be attached. The Legislature, however, recognized that it would not be expedient to leave the matter at that. Hence the proviso. The relevant clauses in order to determine what the word " agriculturist " means are clauses (b) and (c) of the proviso. Under cl. (b) the tools of an artisan are exempted from attachment. According to the Shorter Oxford English Dictionary the word " artisan " means a mechanic, handicraftsman or an artificer. The object of the Legislature in exempting from attachment tools of an artisan was obviously to leave him his tools in order to enable him to make a living. Without his tools the artisan would be destitute, a situation which the Legislature intended to avoid. In the case of a judgment debtor who was an agriculturist, the Legislature intended that his implements of husbandry and such cattle and seed grain as, in the opinion of the court, were necessary to enable him to earn his livelihood as an agriculturist should be exempted from attachment. Here again, the intention of the Legislature was to leave in the hands of an agriculturist sufficient means whereby he could earn his livelihood as an agriculturist. According to Shorter Oxford Dictionary one of the meanings of the word " husbandry " is the business of husbandry, that is to say, a person who tills and cultivates the soil or a farmer. The same dictionary states that one of the meanings of the word 176 " livelihood " is means of living maintenance. It can also mean income, revenue, stipend. In the case of an agriculturist his implements of husbandry must therefore mean implements with which he tills the soil. These are saved from attachment. So far as his cattle and seed grain are concerned, only that much is exempted which, in the opinion of the court, would be necessary to enable him to earn his livelihood and by which he could earn his maintenance. It is to be noticed that under cl. (b) the land which an agriculturist tills is not exempted from attachment. The agricultural produce of the land is exempted to the extent as notified in the Official Gazette issued under section 61 of the Code. On a fair reading of the provisions of cl. (b), that which is saved to an agriculturist are his implements with which he tills the soil and such cattle and seed grain which, in the opinion of the court, are necessary for him to use in order to enable him to maintain himself. The provisions of cl. (b) in the case of an agriculturist, therefore, suggest a person who tills the soil in order to maintain himself. Under cl. (c) houses and other buildings (with the materials and the sites thereof and the land immediately appurtenant thereto and necessary for their enjoyment) belonging to an agriculturist and occupied by him are exempted from attachment. The word " agriculturist " in this clause must carry the same meaning as the word " agriculturist " in cl. (b) and the house must be occupied by him as such. The object of the exemption in el. (c) apparently is that an agriculturist should not be left without a roof over his head. In other words, the Legislature intended by cls. (b) and (c) to prevent an agriculturist becoming destitute and homeless. It was, however, argued on behalf of the appellants that there are no restrictive words in cl. So long as it was a house belonging to an agriculturist and occupied by him, it was exempted from attachment no matter what other income than agriculture was earned by him. The Wada in question was clearly occupied by the appellants for the purpose of tilling the land of the home farm and for storing the produce thereof, the implements of 177 husbandry and tethering of cattle employed in cultivating the land. It seems to us, on the evidence of the appellants ' own witness, that they do not themselves till the land of the home farm which is done by a large number of labourers employed by them. ' Tuljaramarao did not himself cultivate the land. He merely supervised the work of cultivation by the labourers. The witness, however, did state that sometimes Appasaheb and his brother worked personally in the fields. This is a vague statement which does not necessarily mean that they did any act of cultiva tion themselves. The Wada in question is a big structure where the appellants reside but if they are not agriculturists within the meaning of that word in section 60, the Wada cannot be exempted from attachment. It seems to us that even if it is not necessary that a person must till the land with his own hands to come within the meaning of the word " agriculturist " he must at least show that he was really dependent for his living on tilling the soil and was unable to maintain himself otherwise. In the present case it is quite obvious that even if the appellants can be described as agriculturists in the widest sense of that term, they are not agriculturists who are really dependent for their maintenance on tilling the soil and that they are unable to maintain themselves otherwise. The evidence shows that Tuljaramarao was getting an income of nearly 20,000 to 25,000 rupees from lands cultivated in the home farm and that the appellant Appasaheb by extending the acreage of that farm was receiving an income of Rs. 30,000 to Rs. 35,000. In addition he had lands in 10 or 12 other villages and his income from the lands was Rs. 35,000 to Rs. 40,000. Assuming that these figures include the income from the lands of the home farm, they would show that in addition to that income he had an additional income of at least Rs. 5,000 from lands in villages other than Nandi. Furthermore, the appellant Appasaheb is receiving a cash allowance of Rs. 700 to Rs. 800 per annum and Rs. 4,000 to Rs. 5,000 from the village, officers of the four inam villages. In these circumstances, it can hardly be said that the appellant 23 178 Appasaheb is really dependent for his maintenance by tilling the soil and unable to maintain himself other. From this point of view it seems to us that he cannot be regarded as an agriculturist within the meaning of that word in section 60 of the Code. In our opinion, the decision of the High Court that the Wada in question was not Watan property and that it was not exempted from attachment by virtue of the provisions of section 60(1) of the Code is correct. The appeal is accordingly dismissed with costs. SARKAP. The appellants are the legal representatives of one Tuljaram Desai. Tuljaram was the owner of certain watan properties. On his death, his son the appellant Appasaheb became entitled to them. The other appellants are the widow and younger son of Tuljaram. Sometime in 1943 one Vithalrao Thube obtained a decree for Rs. 80,000 against Tuljaram. By 1949 both Tuljaram and Vithalrao had died. The respondent is the successor in interest of Vithalrao. The present appeal arises out of the proceedings for the execution of the decree started by the respondent against the appellants. In this appeal we are concerned only with a wada (building) belonging to the appellant Appasaheb, standing on watan land which the respondent seeks to have attached and sold in execution. It is not now in dispute that watan properties are not saleable properties and cannot therefore be attached and sold in execution. The wada stands on watan land and the respondent seeks to proceed against the structure apart from the land. The appellant Appasaheb contends that he is an agriculturist and that wada belonging to and occupied by him is protected from attachment and sale by cl. (c) of the proviso to sub section (1) of section 60 of the Code of Civil Procedure. He also contends that the wada itself is watan property and is not in view of sub section (1) of section 60 liable to attachment and sale as it is not a saleable property. Now sub section (1) of section 60 makes all saleable property ,liable to attachment and sale in execution. The proviso to it so far as material runs thus : "Provided that the following particulars shall not be liable to such attachment or sale, namely: (b) tools of artisans and where the judgmentdebtor is an agriculturist, his implements of husbandry and such cattle and seed grain as may, in the opinion of the court be necessary to enable him to earn his livelihood as such. (c) houses and other buildings (with materials and the sites thereof and land immediately appurtenant thereto and necessary for their enjoyment) belonging to an agriculturist and occupied by him. " I propose now to consider the question whether the wada is saved from execution under el. (c) of the proviso to sub section (1) of section 60. In order that the clause may apply two conditions have to be fulfilled. First, the person claiming benefit under it must be an agriculturist and secondly the wada must belong to and be occupied by him. First, then, was the appellant Appasaheb an agriculturist within the meaning of the clause ? Now the plain meaning of the word " agriculturist " in the present context, is a person who occupies himself with agriculture, that is, cultivation of land for raising crops. Anybody who is engaged in cultivating land for raising crops would be an agriculturist. So far there is no difficulty. It appears however from the reported decisions that the High Courts have expressed sharply divergent opinions on the question as to who is an agriculturist within the meaning of the clause. The difference however is not on the point that an agriculturist must be one who cultivates but as to whether the agriculturist contemplated in cls. (b) and (c) is one who cultivates with his own hands and whether all persons who carry on agricultural operations are agriculturists within the clauses. These differences have arisen not because any difficulty was felt as to the meaning of the word " agriculturist ", but from the intention of the legislature to be gathered from the other words used in the clauses. In this appeal these authorities have been relied on by the 180 parties as it suited the contention of each. It is necessary therefore to consider the views expressed in these cases and decide whether the word " agriculturist " is to be given its plain meaning or has to be qualified in some way. It is of some significance to state that by and large, the view of one High Court has been discarded by another. One view is that an agriculturist is a person whose main source of livelihood is agriculture: see Tirloki Prasad vs Kunj Behari Lal (1). It is said that this is the right view for an agriculturist must be one who is so by profession. Now the main source of livelihood of a person may vary from time to time: therefore at one period of time a person might be ail agriculturist but not at another. It is not reasonable to hold that such a result was intended. Again it would often be difficult to decide which is the main source of livelihood of a person. Indeed it is not quite clear as to what is meant by main source of livelihood unless it means the livelihood producing the largest income. I find nothing in the clauses to warrant this view: they do not say anything about agriculture being a person 's main source of livelihood in any sense of the word " main ". Furthermore if this view is accepted, a rich farmer who has income from other sources, which income is smaller than his income from agriculture, would be protected by these clauses while a poor peasant who makes a slightly bigger income, say as a day labourer, than he does from agriculture, would be deprived of the protection. I am unable to accept a view which produces such a result. I find no reason why a person who has a profession besides agriculture, should be protected if agriculture is his main profession and not otherwise, particularly when what is protected is agricultural implements, cattle, seed grain and house used for agricultural purposes. Another view taken is that the agriculturist must be one whose sole means of livelihood is cultivation of land but excluding persons carrying on farming in a large way: Muthuvenkatarama Reddiar vs The Official 181 Receiver of South Arcot (1). This view has been discarded in a later full bench decision of the same High Court in Parvataneni Lakshmayya vs The Official Receiver of Kistna (2) to which reference will be made later. For myself, I find nothing in the clauses to justify this view. Take the case of a small cultivator who, in order to maintain himself, takes up the other work and so supplements his income. There is nothing in the clauses to indicate that such a cultivator should be deprived of the protection. It is well known that agricultural operations do not occupy a person for the whole year and as the income from agriculture is for quite a large number not enough to meet their needs, many small cultivators have to supplement their in. come by other work when they are not engaged in the fields. There is nothing in the clauses to lead to the view that these persons were not intended to get the protection. It seems to me manifest that there is no reason to deprive these persons of the benefit of the protection. Neither do I find any words in the clauses to support the view that big farmers are not intended to get the protection. This aspect of the matter will be discussed further later. The view taken in Muthuvenkatarama Reddiar 's case (1) does not therefore appear to me to be well founded. In Nihal Singh vs Siri Ram (3 ) a full bench of the Lahore High Court held that an agriculturist must be one who personally tills and not through servants and does not maintain himself from other sources of income. The reason given to support this view appears to be as follows: The word agriculturist must mean the same thing in cls. (b) and (c). In cl. (b) it is in juxtaposition with the word artisan. An artisan is one who himself practices a handicraft and furthermore he must practice the handicraft not as a hobby but as a living. So in cl. (b) an agriculturist must be one who personally tills and not through servants and maintains himself by agriculture alone. I am not convinced by this reasoning. If the word agriculturist means one who must till with his own (1) Mad. (2) I.L.R. (3) Lah. 182 hands, then it is wholly unnecessary to rely on the juxtaposition of the words artisan and agriculturist in cl. (b) for reaching the conclusion that the Lahore High Court did. It is only if the word " agriculturist " as ordinarily understood includes one who carries on agricultural operations through persons employed by him that it becomes necessary to rely on the reasoning based on the juxtaposition of the two words in the clause. But I am wholly unable to appreciate the logic of this reasoning. Assume that an artisan must be one who works with his own hands. It does not follow that an agriculturist if it does not mean exclusively one who tills with his own hands, must be one who tills only with his own hands when that word is used in juxtaposition with the word artisan. Such juxtaposition would afford no reason for departing from the normal meaning of the word agriculturist. In Hanmantrao vs Dhruvraj (1) also it was said that an agriculturist within the meaning of the clauses is one who tills with his own hands. The reason there put is that since in el. (b) reference is made to implements of husbandry, cattle and seed grain necessary for earning a livelihood as a cultivator, therefore primafacie, only an agriculturist who cultivates with his own hands is meant. Again I am unable to follow the reasoning for a person who lives on cultivation carried on by hired labour would also require implements of husbandry, cattle and seed grain. An agriculturist, as I have said, is one who carries on cultivation. Now one may carry on cultivation himself or through hired labour. In the latter case also he would be an agriculturist within the plain meaning of that word. Then it seems to me that if we exclude from the clause an agriculturist who does not till with his own hands, a most unreasonable situation would ensue. Old and incapacitated small farmers and most women would have to be denied the protection of the clauses. Again, it may so happen that a person carrying on agricultural operations himself becomes unable to do so through ill health for two or three years when he gets the cultivation done (1) I.L.R. 183 by employing labour and resumes cultivation when he regains his health. If the view now under discussion is correct, then such a person would cease to be an agriculturist during the period of ill health though before and after that period he would be an agriculturist. It does not seem to me that such results could have been intended. I come now to the view taken in Parvataneni Lakshmayya vs The Official Receiver of Kistna (1) earlier referred to. It was there said, "We think that, having regard to the scheme of the section exempting from attachment, as it does, tools of artisans, and, where the judgment debtor is an " agriculturist ", his implements of husbandry and such cattle and seedgrain as may in the opinion of the court be neces sary to enable him to earn his livelihood and his houses and other buildings occupied by him, protection is intended to be given to those who are real tillers of the land, and that an " agriculturist " in the section is a person who is really dependent for his living on tilling the soil and unable to maintain him otherwise. " I am unable to agree with this view. It leads to obvious anomalies. Take the case of a person whose sole means of living is agriculture. Suppose he carries on agriculture on a large scale and makes a big income out of it. He would still be dependent on agriculture for his living and unable to maintain himself otherwise. He would be an agriculturist for the purpose of the clauses within the meaning of Parvataneni 's case (1), for that case does not say that a large scale farmer is not an agriculturist. Such a person would be entitled to protection under the clauses even though his income from agriculture is, say Rs. 25,000 a year. Now take the case of a small farmer whose income from agriculture is Rs. 1,000 a year but who also makes Rs. 1,500 from other sources and is able to maintain himself from the latter income. According to Parvataneni 's case (1) such a person would not be an agriculturist for the purpose of the clauses and would not be entitled to any protection under them. I find (1) I.L.R. 184 it impossible that the legislature could have intended such a result. Then again I find nothing in the language of the clauses clearly leading to the view accepted in Parvataneni 's 'case (1) however. The only reference to a living is in cl. (b) and it is to be found in the words " such cattle and seed grain as may. be necessary to enable him to earn his living as such ", that is, as an agriculturist. I do not think that these words lead to the conclusion that the agriculturist contemplated must depend for his living on agriculture. They are intended to define the limit of the protection which an agriculturist is entitled to for his cattle and seed grain. These words must therefore mean such cattle and seed grain as are necessary for the agriculturist to earn his livelihood from agriculture if that was his sole means of livelihood. If that were not so we would have to hold that this part of the clause contemplated an agriculturist whose livelihood depended on agriculture alone and who had no other source of income. Obviously where a person earned his livelihood from agriculture and another source, it could not be decided what cattle and seed grain he would require to earn his living as an agriculturist for the simple reason that he did not earn his living as an agriculturist only. Parvataneni 's case (1) however accepts the view that a person may be an agriculturist within the meaning of the clauses though he may have besides agriculture another source of income. And with that view, for the reasons earlier stated, I entirely agree. There seems to me to be other reasons also why the view taken in Parvataneni 's case (1) is not the correct one. So far as the tools of an artisan are concerned, cl. (b) does not limit the protection to such of them as are necessary to enable him to earn his living as an artisan. Therefore, there is no reason to think that an artisan is one who must be dependent for his living on the handicraft practised by him. Likewise all implements of husbandry of an agriculturist are exempt from attachment and sale. The word " such " occurring before the words I cattle and seed grain in cl. (b) (1) I.L.R. 185 shows that these are protected only to the extent indicated and that there is no limit to the protection afforded to the implements of husbandry of an agriculturist. If this is the correct reading of the clause, as I think it is, then it seems to me impossible to say that an agriculturist whose implements of husbandry are intended to be protected must be one who could not maintain himself apart from agriculture. Likewise, there is nothing in cl. (c) to indicate that the agriculturist there mentioned must be one who depends for his living on agriculture: There remains one other view to consider. It has been said that the agriculturist must be a very small farmer; Muthuvenkatarama Reddiar vs The Official Receiver of South Arcot (1). For this qualification for an agriculturist again, I find no warrant in the clauses or indeed anywhere else in section 60. The various clauses in the proviso to section 60, sub sec. (1) exempting diverse things from attachment and sale are no doubt based on public policy, but the consideration of public policy in each case appears to me to be different. I find it impossible to say that the central idea was to protect the poor or to prevent a person being left destitute. Thus el. (a) protects the necessary wearing apparel, cooking vessels beds and bedding of the judgment. debtor. Even a very rich judgment debtor is entitled to protection under this clause. Clause (d) protects books of account. Here again it is not a poor man alone that is contemplated nor would deprivation of books of account leave one destitute in all cases. Clause (g) protects political pensions which may be and often are of substantial amounts. Clause (h) protects wages of labourers and domestic servants. This clause of course deals with a poor man and is intended to relieve against poverty. Since however, there is no one specific central idea running through all the clauses, each clause has to be construed by itself. Coming then to cls. (b) and (c), I find no justification for the view that they deal only with poor people or are intended to protect against destitution. Thus there (1) Mad. 227. 24 186 is nothing in el. (b) to indicate that the tools of only poor artisans are to be protected. The same thing can be said of an agriculturist. The fact that his cattle and seed grain are protected to the extent necessary to enable him to earn his livelihood does not lead to the view that he must be a poor agriculturist. On the contrary, the clause contemplates an agriculturist who has more cattle and seed grain than he needs for his livelihood. It clearly contemplates a rich and large scale agriculturist. Therefore it seems to me that there is no warrant for imposing any qualification on the plain meaning of the word I agriculturist ' in cls. (b) and (c). In my view, an agriculturist contemplated by the clauses is any person who occupies himself with agriculture. This is the view taken in Gowardhandas vs Mohan Lal (1) and with it I agree. A person occupying himself with agriculture would be an agriculturist though he does not cultivate with his own hands and carries on agriculture in a very large scale. He would still be an agriculturist though he has other means of livelihood besides agriculture. I come now to the facts of this case. The question is, is Appasaheb such an agriculturist as I have indicated ? The evidence clearly shows that he is. It can be said to have been established beyond doubt and not questioned in the Courts below, that Appasaheb was carrying on agricultural operations under his supervision through labour employed by him and with his own cattle and agricultural implements on fifty to sixty acres of land. The evidence also establishes that Appasaheb 's income from agriculture came to Rs. 30,000 to Rs. 35,000 per year. It appears that he was in receipt of cash allowances of Rs. 700 to Rs. 800 per year in respect of the watan and Rs. 4,000 to Rs. 5,000 per year from village officers of the watan villages, neither of which was income from agriculture. These facts in my view make Appasaheb an agriculturist for the purpose of cls. (b) and (c) though it may be that he was not dependent for his living upon agriculture and was a large scale farmer who did not 187 till with his own hands. I wish however to state that there is uncontradicted testimony that Appasaheb personally took part in the agricultural operations. Now cl. (c) protects from attachment and sale houses and other buildings with the sites thereof and land immediately appurtenant thereto and necessary for their enjoyment, belonging to an agriculturist and occupied by him. I think it is a fair reading of this clause to say that the houses, buildings and lands must be occupied by the agriculturist for the purpose of agriculture for the object of these clauses is to protect an agriculturist only so far as is necessary for his agricultural operations. If an agriculturist occupied a house, say as a holiday resort, there would be no reason to protect that house from attachment and sale. The question then arises whether Appasaheb occupied the wada for the purposes of his agricultural operations. I think the evidence makes it perfectly clear that he did so. It shows that the larger part of the wada was used for storing crops, keeping agricultural implements, residence of the farm servants and tethering cattle used for agriculture. Appasaheb and his family lived in a part of the wada but that also was clearly occupation for purposes of agriculture, for it is from there that he supervised the agricultural operations. I have therefore come to the conclusion that the wada is saved from attachment and sale in execution by cl. (c) of the proviso to sub section (1) of section 60 of the Code of Civil Procedure. The other contention of the appellants does not seem to me to be sustainable. It is said that the maxim accession credit principali applies and the wada standing on watan land has acquired the character of watan as an accession to it. It is not in dispute now that the wada was not in existence when the watan was first created but had been built subsequently by one of the watandars. It is also said that the grant of the watan carried full right of ownership in the subject of the grant ; that the grantee had the right to make such use of the land granted as any owner of it could have 188 done. So it was said that the wada had been put up rightfully by the watandar and became part of the watan as an accession to it. There is no doubt that the wada was rightfully constructed. It may be that it became on such construction a part of the land on which it stands and assumed the character of immovable property. But I am unable to agree that it thereupon assumed the inalienable character of watan property and was therefore hot liable to attachment and sale in execution. I do not think that the maxim accessio cedit principali applies in giving the wada put up on watan the character of a watan. Watan is a creation by government grant. It is inalienable under a special Act. The inalienable character attaches under the Act only to the property granted by the government. This peculiar character cannot be extended to other property by the application of the maxim. Therefore it seems to me that the wada is not inalienable though it stands on land which is inalienable as a government grant under a special Act. I would for this reason reject this contention of the appellant. As however in my view, the wada is protected from attachment and sale in execution under cl. (c) to the proviso to sub section (1) of section 60 of the Code of Civil Procedure, I would allow the appeal. BY COURT: In view of the majority Judgment, the appeal is dismissed with costs. Appeal dismissed.

In respect of a decree passed against T, who was the owner of certain watan properties, a building standing on watan land comprised in the said properties, was sought to be attached and sold in execution of the decree. The appellant, who was the legal representative of T, claimed that the building:was not liable for attachment and sale because (1) the building, being part of watan property within the meaning of section 4 of the Bombay Hereditary Offices Act, 1874, was not saleable property under sub section (1) of section 60 of the Code of Civil Procedure, 1908, and (2) in any case, he was an agriculturist and the building belonging to and occupied by him was protected from attachment and sale by cl. (c) of the proviso to sub section (i) of section 60 of the Code. The facts showed that the building was not in existence when the watan was first created but had been built subsequently by one of the watandars and there was no indication on the record that the building was constructed for the purpose of providing remuneration for the performance of the duty appertaining to a hereditary office. The evidence also showed that the appellant was not entirely dependent for his livelihood upon the income from the home farm, that he had substantial income from other lands and that there was nothing to show that this income derived from his other lands was the result of cultivation by him. Held, that the building in question was not an accession to the land so as to partake of the character of the land on which it was constructed and did not come within the definition of watan property in section 4 of ' the Bombay Hereditary Offices Act, 1874. Held, further (per jafer Imam and Raghubar Dayal, jj. Sarkar, J., dissenting), that the word " agriculturist " in cl. (c) of the proviso to sub section (1) of section 60 of the Code of Civil Procedure, 1908, must carry the same meaning as the word in cl. (b) and that in order that a person might come within the meaning of the word in those clauses it must be shown that, he was really dependent for his living on tilling the soil and was unable to 164 maintain himself otherwise, though it was not necessary that he must till the land with his own hands. That on the facts the appellant was not an agriculturist within the meaning of the word in section 60 of the Code. Case law reviewed. Per Sarkar, J. (1) On the plain meaning of the word agriculturist " in cls. (b) and (c) of the proviso to sub section (1) of section 60 of the Code an agriculturist is any person who occupies himself with agriculture. There is nothing in cl. (c) to indicate that the agriculturist there mentioned must be one who depends for his living on agriculture. A person occupying himself with agriculture would be an agriculturist though he did not cultivate with his own hands and carried on, agriculture in a very large scale. He would still be an agriculturist even if he had other means of livelihood besides agriculture. (2) Under cl. (c) in order that houses and buildings belonging to an agriculturist might be protected from attachment and sale they must be occupied by him for the purpose of agriculture.

Civil Appeal No. 891 of 1980. From the Judgement and order dated the 22nd February, 1980 of the Karnataka High Court in Writ Appeal No. 949 of 1 974. K. Parasaran, Soliciter General, Vineet Kumar, Naresh Kumar and Miss Deepika Saxena for the appellant. K.K. Venugopal, K.N. Bhat, M. Kangaswamy, MRV. Achar, section Ravindra Bhatt and Nanjappa Ganapathy for the respondents. The Judgment of the Court was delivered by MADON, J. This Appeal has been filed by the Karnataka State Road Transport Corporation pursuant to a certificate granted by the Karnataka High Court against its Judgment and order in Writ Appeal No. 949 of 1974 on the following two questions of law: "1. Whether the conditions of a permit can be varied so as to increase the number of trips and/or the number of vehicles allowed to be operated under that permit ? 2. Whether the conditions of a permit held by an existing operator on an inter State route exempted under the Kolar Pocket Scheme, can be varied so as to allow an increase in the number of vehicles operating under that permit ? Before embarking on a discussion of the above questions, it will be convenient to relate the facts which have given rise to this Appeal. On February 2, 1966, the First Respondent, B.A. Jayaram, 772 had been granted by the Regional Transport Authority, Bangalore, a stage carriage permit on the inter State route Cuddapah in the State of Andhra Pradesh to Bangalore in the State of Karnataka for one trip only and a stage carriage permit No. 20/65 66 in respect of this route was issued to him on March 16, 1966. This permit was counter signed by the State Transport Authority Andhra Pradesh, on March 21, 1967. By Notification No. S.O. 111 dated January 10, 1968, published in the Mysore Government Gazette dated January 25, 1968, the Government of Mysore (now Karnataka) granted its approval under sub section (2) of section 68 D of the (IV 1939) (hereinafter referred to as "the said Act") to a scheme set out in the Schedule to the said Notification. The said Scheme covered 87 intra State routes in the State of Karnataka set out in the Appendix to the said Scheme. The effect of the said Scheme was to nationalize passenger transport service between Bangalore and various places in the Kolar District as also certain routes within the Kolar District. For this reason, the said Scheme was popularly known as the Kolar Pocket Scheme '. The class of service covered by the said Scheme was "Stage Carriages, Mofussil". Clause 4 of the said Scheme inter alia provided as follows: "Whether the services are to be operated by the State Transport Undertaking to the exclusion, complete or partial, of other persons or otherwise: The State Transport Undertaking will operate services on all the routes, to the complete exclusion of other persons except that: (a) that existing permit holders on the inter State routes, may continue to operate such inter State routes subject to the conditions that their permit shall be rendered ineffective for the overlapping portions of the notified routes. " The said Scheme was implemented with effect from January 1, 1969, by issuing a stage carriage permit to the Appellant under sub section (1) of section 68 F of the said Act. The route between Bangalore and Royalpad in the State of Karnataka formed part of the route between Bangalore and Cuddapah and was covered by the said Scheme. Accordingly, the First Respondent 's permit for the said portion of the Bangalore Cuddapah 773 route became ineffective with the result that the vehicles operated by the First Respondent could not either pick up or set down passengers on the Bangalore Royalpad portion of the Bangalore Cuddapah route though they could traverse the said portion. On January 24, 1973, the First Respondent made an application to the Karnataka state Road Transport Authority, the Second Respondent before us, for varying the conditions of the stage carriage permit granted to him by increasing the number of trips on the Bangalore Cuddapah route from one trip per day to two trips per day This was apparently done to eliminate an overnight halt at either of the two termini. The said application was rejected by the Second Respondent on April 22, 1974, as not being maintainable in view of the said Scheme, without publishing it for inviting objections thereto. The First Respondent thereupon filed a writ petition in the Karnataka High Court, being Writ Petition No. 3360 of 1974, against the said order of the Second Respondent. On September 25, 1974, the said writ petition was allowed and the court issued a writ of mandamus to the Second Respondent to dispose of the First Respondent 's said application in accordance with law, holding that the said Scheme did not operate as a bar to increasing the number of trips of an existing inter State route. In pursuance of the said order of the High Court, the Second Respondent published the First Respondent 's said application inviting representations in connection therewith. In the meanwhile the Appellant filed on November 27, 1974, a writ petition in the Karnataka High Court, being Writ Petition No. 6399 of 1974, to recall the order made in the said Writ Petition No. 3360 of 1974 and to rehear the said writ petition after impleading the Appellant as a respondent thereto. A learned Single Judge of the said High Court dismissed the Appellant 's said writ petition on December 2, 1974, holding that the Appellant was not a necessary party to the said Writ Petition No. 3360 of 1974. On December 23/24, 1974, the Second Respondent granted to the First Respondent the additional trip applied for by him. Against the order of the learned Single Judge dismissing its writ petition, the Appellant filed alia intra Court appeal under section 4 of the Karnataka High Court Act. 1961 (Mysore Act V of 1962), being Writ Appeal No. 949 of 1979 The Division Bench, which heard the said appeal, referred the following question to a larger Bench for its opinion: "If the condition of a permit for operating a stage carriage over a route is altered by increasing the maximum number of trips over that route, specified earlier ill that 774 permit, does such variation of the condition of the permit amount to grant of a new permit ?" By its Judgment delivered on September 19, 1979, the Full Bench answered the said question as follows: "If the condition of a permit for operating a stage carriage over a route is altered by increasing the maximum number of trips over that route specified earlier in the permit such variation of the condition of the permit does not amount to grant of a new permit. " We will now relate the circumstances in which the Third Respondent, section Joginder Singh, the sole proprietor of Janatha Travels, Bangalore, and the Fourth Respondent, D.P. Sharma, sole proprietor of Sharma Transport, Bangalore, made their entry on the stage of this litigation. The Third Respondent had been granted three stage carriage permits on three different inter state routes, namely, Bangalore to Cuddapah, Bangalore to Kalahasti and Bangalore to Vellore. After coming into force of the said Scheme, the third Respondent made applications on June 11, 1979, to the second Respondent for varying the conditions of the said three permits by increasing the number of vehicles by an additional vehicle on each route and by increasing the number of trips from two to four on each route, that is, for two round trips These applications were granted be the second Respondent. The Fourth Respondent did not file any objections to the said applications for variation made by the Third Respondent, nor does it appear that the had filed any objection to the said application for variation made by the First Respondent. The Fourth Respondent, however., filed three writ petitions, being Writ Petitions Nos. 16247 to 16249 of 1979, in the Karnataka High Court against the orders of the Second Respondent granting variation of the Third Respondent 's said permits. The said writ petitions were dismissed by a learned Single Judge of the Karnataka High Court and against these orders of dismissal the Fourth Respondent preferred three writ appeals, being Writ Appeals Nos. 1285 to 1287 of 1979. He also made an application to implead himself as a respondent in the said Appeal No. 949 of 1974 out of which the present appeal before us arises. The Fourth Respondent 's said application was granted and he was impleaded as Fourth Respondent to the said Writ Appeal No. 949 of 1974. The Third Respondent before us was the Third Respondent in the said Writ Appeal No. 949 of 1974. 775 By Notification HD 45 TMI 76 dated January 10, 1980, the said Scheme was modified by substituting clause (d) thereof. The substituted clause (d) inter alia provided as follows: "The State Transport undertaking will operate the services on all routes to the complete exclusion of other persons except the following : x x x x x (c) The operation of services by the permit holders who have already been granted permits by the Transport Authorities on the date of publication of the modified c scheme on inter State routes which are included in the inter State agreement entered into by the Government of any other State provided that the operator on such route shall not be entitled to pick up and set down passengers in such portion of the Notified routes. " By its Judgment and order dated February 22, 1980, a Division Bench of the Karnataka High Court dismissed the said writ appeals filed by the Fourth Respondent . The Division Bench held that in view of the opinion given by the Full Bench in the said Writ Appeal No. 949 of 1974 it was permissible under sub section (8) of section 57 of the said Act to vary the conditions of a stage carriage permit in respect of a route so as to increase the number of trips on that route allowed under such permit; that increase in the number of trips on a route can be effected either by increasing the frequency of operation of the existing number of vehicles playing on that route without increasing the existing number of vehicles operating on that route or by increasing the number of vehicles operating on that route; and that the Fourth Respondent was not an existing inter State Permit holder nor had filed any objection before the Second Respondent to the applications for variation made by the Third Respondent and had, therefore, no locus to file the said writ petitions. By its Judgment and order, made on the same day, the said Division Bench dismissed the Appellant 's said Writ Appeal No. 949 of 1974 with no order as to costs and granted to the Appellant a certificate of fitness to appeal to this Court on the two questions which we have set out earlier; in pursuance of which the present Appeal has been filed. The Fourth Respondent has also filed in this Court a petition for special leave to appeal, being Special Leave Petition No. 4771 of 1980, against the said Judgment and order in the said Writ Appeal No. 949 of 1974. He has also 776 filed three other petitions for special leave to appeal to this Court, being Special Leave Petitions Nos. 5141 to 5143 of 1980 against the common Judgment and order of the said High Court in the said Writ Appeals Nos. 1285 to 1287 of 1979. These petitions have been ordered to be listed after the disposal of this Appeal and will accordingly be disposed of by separate orders. We now turn to the rival contentions raised before us at the hearing of this Appeal. On behalf of the Appellant, it was submitted that under sub section (8) of section 57 an application to vary the conditions of a permit in respect of a matter specified in that sub section "shall be treated as an application for the grant of a new permit. " Subsection (8), therefore, creates a legal fiction and a legal fiction must be taken to its logical conclusion. An application to vary the conditions of a permit in respect of a matter specified in sub section (8) when granted would, therefore, result in the grant of a new permit. One of the matters specified in subsection (8) is a variation of the conditions of a stage carriage permit by increasing the number of trips above the specified maximum. If such variation were permitted by the result of the operation of the statutory fiction enacted in sub section (8) of Section 57 the permit so varied would in law be a new permit. Under section 618 FF of the said Act no permit can be granted except in accordance with the provisions of a scheme. The said Scheme prohibits of a new permit and, therefore, to vary the conditions of a stage carriage permit by increasing the number of trips or the number of vehicles would be tantamount to granting a new permit which would be contrary to the said Scheme and thus not permissible under section 68 FF. According to the Appellant, the Judgment of the learned Single Judge in the said Writ Petition No. 3360 of 1974 filed by the : First Respondent allowing the said Writ Petition No. 3360 of 1974 and setting aside the order of the Second Respondent rejecting as not maintainable the First Respondent 's said application for varying the conditions of his inter State carriage permit by increasing the Dumber of trips by one and directing the Second Respondent by a writ of mandamus to dispose of the said application in accordance with law was erroneous as also the decision of the Full Bench in the said Civil Appeal No. 949 of 1974, holding that such variation did not amount to grant of a new permit. It was further submitted that increasing the number of vehicles on a route resulted in an increase in the number of trips and an application for varying the conditions of a permit by increasing the number of vehicles allowed to ply on the route in respect of which such permit was given was, therefore, 777 equally an application for the grant of a new permit and such an application could not, therefore, be granted in respect of a portion of a route covered by the said Scheme. On the other hand, it was submitted on behalf of The contesting Respondents that sub section (8) of section 57 did not create a legal fiction and all that it did was to provide that the procedure . for considering an application for varying the conditions of a permit in respect of the matters specified in that sub section was to be the same as the procedure for considering an application for granting a new permit. In the alternative, it was submitted that if sub section (8) of section 57 created a legal fiction, it was only for the purpose of the procedure to be followed in processing an application for a variation in the conditions of a permit in respect of a matter specified in that sub section and cannot be extended beyond that purpose so as to create another legal action, namely, that permit the conditions of which were so allowed to be varied would be deemed to be a new permit. It was further submitted that the said Scheme, both prior to and after its modification, permitted the existing permit holders on inter State routes to continue to operate on such routes subject to the condition that their permits be rendered ineffective for the overlapping portions of the notified routes only, with the result that they could not pick up and set down passengers on such portions only. It was also submitted that increasing the number of trips or vehicles on such inter . State routes was not in any manner inconsistent with the provisions of the said Scheme, whether prior to or after its notification. On the above rival contentions, two main questions arise for our consideration, namely, (1) Whether sub section (8) of section 57 creates a legal fiction by reason of which the grant of an application for variation in the conditions of a permit in respect of a matter set out in that sub section results in the grant of a new permit ? (2) Whether an increase in the number of trips or the number of vehicles above the maximum specified in an existing inter State stage carriage permit would be inconsistent with the provisions of the said Scheme ? In order to determine these questions, it is necessary to refer to the relevant provisions of the said Act. Chapter IV of the said 778 Act, which consists of sections 42 to 68, provides for control of transport vehicles. A "transport vehicle," is defined by clause (33) of section 2 as meaning "a public service vehicle or a goods vehicle". A "public service vehicle" is defined by clause (25) of section 2 as meaning "any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a motor cab, contract carriage, and stage carriage;". The expression "stage carriage" is defined by clause (29) or section 2 as follows: "(29) "stage carriage" means a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey." As the said Scheme and its modification relate only to stage carriages, we are not concerned in this Appeal with contract carriages or goods vehicles and it is unnecessary to look at the definitions of those expressions or the provisions of the said Chapter IV l elating to these types of vehicles. Under section 42 no owner of a transport vehicle can use or permit the use of the vehicle in any public place (whether or not such vehicle is actually carrying any passenger or goods) save in accordance with the conditions of a permit granted or counter signed by a Regional or State Transport Authority or the Commission, that is, the Inter State Transport Commission constituted under section 63 A, authorizing the use of the vehicle in that place in the manner in which the vehicle is being used. Section 43 confers power upon the State Government to control road transport by issuing directions to the State Transport Authority in the form of notifications in the official Gazette. Section 44 empowers the State Government by notification in the official Gazette to constitute for the State a State Transport Authority to exercise and discharge the powers and functions specified in subsection (3) of section 44 and in like manner to constitute Regional Transport Authorities to exercise and discharge throughout specified areas the powers and functions conferred on Regional Transport Authorities by the said Chapter IV. The said Chapter IV provides for grant of different permits, namely, state carriage permits, contract carriage permits, private carrier 's permits, public carrier 's permit and temporary Permits, as also for applications to 779 be made in respect of these classes of permits, the procedure to be A followed in dealing with such applications, for cancellation and suspension of permits and other cognate matters. Section 45 sets out the general provisions with respect to applications for permits irrespective of the type of permits applied for and it prescribes the authority to whom an application for a permit is to be made. Under sub section (3) of section 45 every applicant for the grant of a new stage carriage permit or public carrier 's permit is required to deposit, by way of security, with his application an amount in such manner and at such rate not exceeding Rs. 200 per motor vehicle, as the State Government may, with reference to each class of vehicle, by notification in the official Gazette, specify. Under sub section (4) of section 45 the security so furnished is liable to be forfeited in whole or in part by the transport authority if it is satisfied that the application was made for the purpose of preventing the issue of a temporary permit under section 62. The whole or part of this security deposit as has not been forfeited is to be refunded to the applicant, as soon as may be, after the disposal of his application. Other sections in the said Chapter IV male special provisions with respect to applications for different types of permits. Section 46 deals with an application for a stage carriage permit. Such an application is to contain the particulars specified in clauses (a) to (f) of the said section 46. The particulars required to be specified by clauses(a) to (c) of the said section 46 are material for our purpose and it will be, therefore, convenient to reproduce these clauses these clauses provide as follows: "(a) the route or routes or the area or areas to which the application relates; (b) the number of vehicles it is proposed to operate in relation to each route or area and the type and seating capacity of each such vehicle; (c) the minimum and maximum number of daily trips proposed to be provided in relation to each route or area and the time table of the normal trips. Explanation For the purposes of this section 57, "trip" means a single journey from one point to another, and every return journey shall be deemed to be a separate trip. " 780 Section 47 prescribes the matters which a Regional Transport Authority is to have regard to in considering an application for a stage carriage permit. It also requires the Regional Transport Authority to take into consideration any representations made by persons already providing passenger transport facilities by any means along or near the route or area or by any association representing persons interested in the provision of road transport facilities recognized in this behalf by the State Government or by any local authority of police authority within whose jurisdiction any part of the proposed route or area lies. The said section also provides for reservation of certain percentage of stage carriage permits for the Scheduled Castes, and the Scheduled Tribes and persons belonging to economically weaker sections of the community. Under section 48, subject to the provisions of section 47, a Regional Transport Authority may, on an application made to it under section 46 grant a stage carriage permit in accordance with the application or with such modifications as it deemed fit or refuse to grant such a permit. Sub section (3) of section 48 provides for conditions which may be attached to a stage carriage permit. Amongst the conditions which can be attached are conditions that the vehicle or vehicles be used only in a specified area or on a specified route or routes, the minimum and maximum number of daily trips to be provided in relation to any route or area generally or on specified days and occasions and a condition that within municipal limits and such other areas and places as may be prescribed, passengers or goods shall not be taken up or set down except at specified points. Sections 49 to 51 deal with contract carriage permits, sections 52 and 53 with private carrier 's permits and sections 54 to 56 with public carrier 's permits. Section 57 is important since the answer to the first question which we have to determine in this Appeal depends upon the true interpretation of sub section (8) thereof and in order to understand the scope and effect of that sub section, it is necessary to reproduce section 57. The said section 57 provides as follows: "27. Procedure in applying for and granting permits (1) An application for a contract carriage permit or a private carrier 's permit may be made at any time. (2) An application for a stage carriage permit or a public carrier 's permit shall be made not less than six weeks before the date on which it is desired that the permit shall take effect, or if the Regional Transport Autho 781 rity appoints dates for the receipt of such applications, on such dates. (3) on receipt of an application for a stage carriage permit or a public carrier 's permit, the Regional Transport Authority shall make the application available for inspection at the office of the Authority and shall publish the application or the substance thereof in the prescribed manner together with a notice of the date before which representations connection therewith may be submitted and the date, not being less than thirty days from such publication, on which, and the time and place at which, the application and any representations received will be considered: Provided that, if the grant of any permit in accordance with the application or with modifications would have the effect of increasing the manner of vehicles operating in the region, or any area or on any route within the region, under the class of permits to which the application relates, beyond the limit fixed in that behalf under sub section (3) of section 47 or sub section (2) of section 55, as the case may be, the regional Transport Authority may summarily refuse the application without following the procedure laid down in this sub section. (4) No representation in connection with an application referred to in sub section (3) shall be considered by the Regional Transport Authority unless it is made in writing before the appointed date and unless a copy thereof is furnished simultaneously to the applicant by the person making such representation. (5) When any representation such as is referred to in sub section (3) is made, the Regional Transport Authority shall dispose of the application at a public hearing at which the applicant and the person making the representation shall have an opportunity of being heard either in person or by a duly authorised representative. (6) When any representation has been made by the persons or authorities referred to in section SO to the effect that the number of contract carriages for which permits have already been granted in any region or any area 782 within a region is sufficient for or in excess of the needs of the region or of such area, whether such representation is made in connection with a particular application for the grant of a contract carriage permit or otherwise, the Regional Transport Authority may take any such steps as it considers appropriate for the hearing of the representation in the presence of any persons likely to be affected thereby. (7) When a Regional Transport Authority refuses an application for a permit of any kind, it shall give to the applicant in writing its reasons for the refusal. (8) An application to vary the conditions of any permit, other than a temporary permit, by the inclusion of a new route or routes or a new area or, in the case of a stage carriage permits by increasing the number of trips above the specified maximum or by altering the route covered by it or in the case of a contract carriage permit or a public carrier 's permits by increasing the number of vehicle covered by the permit, shall be treated as an application for the grant of a new permit. Provided that it shall not be necessary to treat an application made by the holder of a stage carriage permit who provides the only service on an route or in any area to increase the frequency of the service so provided, with out any increase in the number of vehicles. (9) A Regional Transport Authority may, before such date as may be specified by it in this behalf, replace any stage carriage permit or public carrier 's permit or public carrier 's permit granted by it before the said date by a fresh permit conforming to the provisions of Section 48 or section 51 or section 56, as the case may be, and the fresh permit shall be valid for the same route or routes or the same area for which the replaced permit was valid; Provided that no condition other than the condition which was already attached to the replaced permit or which could have been attached thereto under the law in force when that permit was granted shall be attached to the fresh permit except with the consent in writing of the holder of the permit. 783 (10) Notwithstanding anything contained in section 58, a permit issued under the provisions of sub section (9) shall be effective without renewal for the remainder of the period during which the replaced permit would have been so effective. " We will must conclude our survey of the relevant provision of the said Act before proceeding to ascertain the correct interpretation to be placed upon sub section (8) of section 57. Section 588 provides that a stage carriage permit or a contract carriage permit, other than a temporary permit issued under section 62, shall be effective without renewal For such period. not less than three years and not more than five years, as the Regional Transport Authority may specify in the permit. A private carrier 's permit or a public carrier 's permit other than 3 temporary permit is to be effective without renewal for a period of five years. Under sub section (2) of section 58 an applications for renewal of a permit is to be made and disposed of as if it were an application for a permit. Subsection (2) also prescribes the time limit within which applications for renewal are to be made and it further provides that other conditions being equal, an application for renewal shall be granted preference over new applications for permits. Section 59 prescribes the general conditions to be attached to all permits. Section 60 deals with cancellation and suspension of permits. It is unnecessary to refer to the other provisions of the said Chapter IV. Chapter IV A of the said Act provides for nationalization of road transport service. Under section 68 B the provisions of Chapter IV A and the rules and orders made thereunder are to have effect notwithstanding anything inconsistent therewith contained in Chapter IV of the said Act or any other law for the time being in force or in any instrument having effect by virtue of any such law. Section 68 C deals with the preparation of a scheme by a State Transport Undertaking for the purpose of providing an efficient, adequate, economical and property coordinated road transport service. Such a scheme is to be published in the official Gazette and also in such other manner as the State Government may direct. Section 68 D provides for filing of objections to a proposed scheme. Under Sub section (2) of section 68 D, after considering the objections which may have been made to a proposed scheme and after giving an opportunity to the objector or his representatives and the representatives of the State Transport Undertaking to be heard in 784 the matter, the State Government may approve or modify the scheme. The scheme as approved or modified is to be published in the official Gazette and it is there upon to become final and is to be called the approved scheme and the area or route to which it relates is to be called the notified area or notified route. Section 68 F provides for cancelation or modification of approved schemes. Section 68 F provides for issue of a stage carriage permit or a public carrier 's permit or a contract carriage permit in respect of a notified area or notified routes to the State Transport Undertaking. Section 68 FF provides as follows: "68 FF Restriction on grant of permits in respect of a notified area or notified route. Where a scheme has been published under sub section (3) of section 68 D in respect of any notified are or notified route, the State Transport Authority or the Regional Transport Authority, as the case may be, shall not grant any permit except in accordance with the Provisions of the scheme " There is a proviso to the said section 68 FF with which we are not concerned. We now turn to a consideration of the scope and effect of sub section (8) of section 57. That sub section does not apply to applications to vary any of the conditions of a permit but applies only to applications to vary certain conditions of a permit. These applications are: (1) an application to vary the conditions of any permit, other than a temporary permit, by the inclusion of a new route or routes or a new area; (2) an application to vary the conditions of a stage carriage permit by increasing the number of trips above tho specified maximum; (3) an application to vary the conditions of a stage carriage permit by altering the route covered by it; (4) an application to vary the conditions of a contract carriage permit by increasing the number of vehicles covered by the permit: and (5) an application to vary the conditions of a public carrier 's 785 permit by increasing the number of vehicles covered by the permit. In all these five cases, sub section (8) provides that the application "shall be treated as an application for the grant of a new permit". As seen above, under section 68 F when a scheme has been approved and published under sub section (3) of section 68 D in respect of any notified area or notified route, the State Transport Authority or the Regional Transport Authority, as the ease may be, is prohibited from granting any permit except in accordance with the provisions of that scheme. The said Scheme confers a right upon the Appellant to op rate the services on all routes mentioned in the appendix to the said Scheme to the complete exclusion of all other persons except existing permit holders on inter State routes with the condition that the permits of such existing permit holders were to be rendered ineffective for the overlapping portions of the notified routes and they would not be entitled to pick up or set down passengers on such portions of the notified routes. If the effect of sub section (8) of section 57 were as contended for by the Appellant, that is, if the said sub section (8) were to create a legal fiction by which an application for variation of the conditions of a permit of the nature referred to in that subsection is to be deemed to be an application for the grant of a new permit and such variation when granted would result in the grant of a new permit, then clearly by reason of the prohibition contained in section 68 FF, the granting of such application would be inconsistent with the provisions of the said Scheme and would not be permissible in law. Considerable emphasis were placed on behalf of the Appellant on the words ' shall be treated as an application for the grant of a permit occurring in the said sub section (8) and on the basis of this phraseology, it was submitted that an application for variation of a condition of a permit referred to in subsection (8) of section 57 was by a fiction of law put on the same footing as an application for the grant of a new permit and it, therefore, followed as a corollary that such an application if granted would result in the grant of a new permit. In a passage which has become a classic Lord Asquith in the House of Lords in the case of East End Dwellings Co. Ltd. v Finsbury Borough Gouncil said: 786 "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequence and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs " This passage has been referred to or quoted with approval in a number of decision of this Court. One of the earliest of them as the State of Bombay vs Pandurang Vinayak Chaphalkar and others. It is unnecessary to refer to other cases of this Court in which this passage was cited and approved. The question, however, is whether sub section (8) of section 57 creates a legal fiction. Admittedly, the language of that sub section is not one which is normally used by legislature in creating a legal fiction. Sub section (8) does not state that an application of the nature referred to in that subsection is to be deemed to be an application for the grant of a new permit which would have been the case were the intention of Parliament to create a legal fiction. The arguments on behalf of the Appellant are founded upon a basis which has no relation to the purpose underlying sub section (8). Section 57 is a procedural section, Its various sub sections form an integra whole providing for the manner in which an application for variation of certain conditions of a permit is to be made, the mode of inviting objections thereto an the disposal of such applications and objections. Subsection (1) provides when an application for a contract carriage permit or a private carrier 's permit can be made. Sub section (2) provides when an application for a stage carriage permit or a public carriages permit should be made. Thus, these two subsections deal with the time when applications for grant of certain classes of permits can be made. Sub sections (3) to (7) prescribe the procedure to be followed by the Regional Transport Authority when it receives an application for a stage carriage permit or a public carrier 's permit. Sub section (9) deals with applications to vary certain conditions of particular permits. Sub section (9) confers power upon the Regional Transport Authority to replace a stage 787 carriage permit, contract carriage permit or public carrier 's permit granted by it by a fresh permit and sub section (10) provides that such fresh permit shall be effective without renewal for the remainder of the period during which the replaced permit would have been so effective. Sub section (8) comes immediately after sub sections (3) to (7) and when read in the context of these sub sections and in juxtaposition with them, it is clear that the legislative intent in enacting that subsection was to prescribe the procedure to be followed when an application for variation of this conditions of a permit referred to in that sub section is made, this procedure being the same as is laid down in sub sections (3) to (7) with respect to an application for a new stage carriage permit or a new public carrier 's permit. It is for the purpose of providing that the procedure to be followed in the case of an application made under sub section (8) is to be the same as the procedure to be followed in the case of an application for a new permit that sub section (8) uses the words "shall be treated as an application for the grant of a new permit. " By the use of these words what sub section (8) does is to incorporate in it the provisions of sub sections(3) to (7). This is a very different thing from enacting a legal fiction. We find that in a recent case, namely, Civil Appeal No. 3787 of 1983 Myls Shivchand Amolakchand vs Regional Transport Authority and another subsection (8) of section 57 has been interpreted in the same way as we have done. In that case too there was a modification made in an approved scheme whereby plying of stage carriages by private operators upon a portion of the notified route connecting a district headquarter and not more than 20 kms. in length was permitted. On the said modification being made, the applicants whose permits for a portion of the notified route, namely, from Shivpuri to Sautanwana, had become ineffective on the coming into force of the approved scheme applied to the Regional Transport Authority for the extension of the route specified in their permits, so as to include the route from Shivpuri to Santawana. The Regional Transport Authority rejected the said application inter alia on the ground that no extension of the route could be granted without following the procedure laid down in sub section (3) of section 47 of the said Act. In the writ petition filed by the appellants before the High Court of Madhya Pradesh, the High Court took the same view. This Court allowed the appeal and set aside the Judgment and order of the 788 High Court. In that case too, this Court had to consider the effect of sub section (8) of section 57. The Court observed: "The context in which sub section (8) occurs and its juxtaposition with sub section (3) to (7) in section 58 clearly indicate that what is sought to be made applicable to an application referred to in sub section (8) by treating it as an application for grant of a new permit, is the procedure set out in sub sections (3) to (7) of section 58 and nothing more. An application to vary the conditions of a permit as set out in sub section (8) of section 57 is undoubtedly to be treated as an application for grant of a new permit, but that is only for the purpose of applying the procedure set out in sub sections (3) to (7) of the said section. It is not an application for a new permit and if it is granted, the permit for the extended route does not become a new permit in the hands of the applicant. It is the same permit which now, after the granting of the application, covers the extended route. " Even if sub section (8) of section 57 can be viewed as creating a legal fiction the question which would arise would be for what purpose such legal fiction was created. As was observed by lord James in Ex Porte Walton, In re Levy; "When a statute enacts that something shall be deemed to have been done, which in fact and in truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to. " This passage was quoted with approval by the House of Lords in Arthur Hill vs East and West India Dock Company. This principle of statutory interpretation has been accepted by this Court. In The Bengal Immunity Co. Ltd. vs The State of Bihar and Ors it was held that "a legal fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field. " This was reiterated in The Commissioner of Income 789 tax, Bombay City, Bombay vs Amarchand N. Shroff, Maharani Mandalsa Devi vs M. Ramnarain P. Ltd. and others and Commissioner of Income tax, Gujarat vs Vadilal Lallubhai. Assuming, therefore, that an application for variation of the conditions of a permit referred to in sub section (8) of section 57 is to be deemed by a fiction of law to be an application for the grant of a new permit the question to which we must address ourselves is for what purpose is such an application for variation deemed to be an application for grant of a new permit. Reading sub sections (3) to (8) of section 57 as a whole, it is clear that the only purpose is to apply to such an application for variation the procedure prescribed by sub sections (3) to (7) of section 57 and not for the purpose of providing that when the application for variation is granted, the permit so varied would be deemed to be a new permit. If a permit so varied were to be deemed to be a new permit, the result would be anomalous. As we have seen, under sub section (3) of section 45 every application for the grant of a new stage carriage permit or a public carrier 's permit is to be accompanied by a deposit by way of security of an amount not exceeding Rs. 200 per motor vehicle as the State Government may, with reference to each class of vehicle, by notification in the official Gazette, specify. The object of providing for such a deposit is made clear by sub section (4) of section 45. The object is that if the transport authority is satisfied that such application was made for the purpose of preventing the issue of a temporary permit under section 62, then it can forfeit the whole or part of the security deposit. consideration does not and cannot be applied to an application for variation of the conditions of a permit referred to in sub section (8) of section 57. Further, under subsection (1) of section 58 a stage carriage permit or a contract carriage permit, other then a temporary permit, is to be effective without renewal for such period, not less than three years and not more than five years, as the Regional Transport Authority may specify in the permit. Under sub section (2) of section 58, an application for renewal of a stage carriage permit or a public carrier 's permit is to be made not less than 120 days before the date of its expiry and an application for renewal of a permit in any other case is to be made not less than 60 days before the date of its expiry. Under sub section (3) a permit may be renewed on an application made and 790 disposed of as if it were an application for a permit. If a permit in respect of which a condition referred to in sub section (8) of section 57 is allowed to be varied is to be deemed to be a new permit, it would automatically follow that such a permit would get extended for a further period even though no application for its renewal was made and that in granting such variation, the Regional Transport Authority would have to specify for what period, not less than three years, the permit so varied would be effective. Such a result could not have been in the contemplation of Parliament and has not been provided for. Even though when the condition of a permit is allowed to be varied on an application made under sub section (8) of section 57, the permit so varied is not a new permit, the question still remains whether in the case of an existing inter State permit exempted under the said Scheme an increase in the number of trips or the number of vehicles allowed to be operated under such a permit would not be inconsistent with the provisions of the said Scheme. We fail to see any inconsistency between an increase in the number of vehicles or trips allowed under such a permit and the provisions of the said Scheme. So far as the portions of the inter State route covered by the said Scheme are concerned, the permits of the existing permit holders have been rendered ineffective. Further, by the said Scheme as modified, the existing permit holders are not allowed to pick up or set down passengers on these portions of the notified routes. Whether one vehicle or more traverse these portions or whether the same vehicle traverses such portion more than once cannot any manner affect the services operated by the Appellant on such portions since no passengers are allowed to be picked up or set down or such portions. All that would happen is that these vehicles, in the course of their inter State operation would traverse these portions of the notified routes without in any way operating as stage carriages for such portions. It is, therefore, clear that the Second respondent was in error in rejecting the First Respondent 's said application for variation without following the procedure laid down in sub sections (3) to (7) of section 57 merely on the ground that granting such application would be to grant a new permit and would be inconsistent with the provisions of the said Scheme. The learned Single Judge was, therefore, clearly right in allowing Writ Petition No. 3360 of 1964 filed by the First Respondent and in issuing a writ of mandamus against the Second Respondent directing him to dispose of the First Res 791 pondent 's said application according to law. We are further of the opinion that the High Court was right in dismissing the said Writ Appeal No. 949 of 1974 filed by the Appellant. We would like to observe that it is difficult to understand how a certificate was granted by the High Court with respect to the first question contained in it. The question as framed does not bring out the actual controversy between the parties. The controversy was not whether the conditions of a permit can be varied so as to increase the number of trips or the number of vehicles allowed to be operated under that permit as mentioned by the High Court in the certificate granted by it. The real controversy was whether when the condition of a permit is varied so as to increase the number of trips or the number of vehicles allowed to be operated under that permit it would amount to the grant of a new permit, the grant of which would not be in accordance with the provisions of the said Scheme by reason of the provisions of section 68 FF. For the reasons set out above, this Appeal fails and is dismissed. The Appellant will pay to Respondent Nos. 1 to 3 the costs of this Appeal. Respondent No. 4 will bear and pay his own costs of this Appeal. S.R. Appeal dismissed.

On February 2, 1966, the Respondent No. 1, B. A. Jayaram had been granted by the Regional Transport Authority, Bangalore, a stage carriage permit on the inter state route Guddapah in the State of Andhra Pradesh to Bangalore in the Karnataka State, which was duly countersigned by the State Transport Authority, Andhra Pradesh. On 10.1 1968, the Mysore (Karanataka) State granted its approval under section 68(D)(2) of the Motor Vehicle Act, 1939, to a scheme, popularly known as the "Kolar Pocket Scheme", to nationalize passenger transport service between Bangalore and various places in the Kolar District, as also certain routes within the Kolar District, covering 87 inter state routes referred to in its appendix. Under clause 4 of the "Kolar Pocket Scheme", the existing permit holders on the inter state routes, were permitted to continue to operate such inter state routes subject to the conditions that their permit shall be rendered ineffective for the overlapping portions of the notified routes. The route between Bangalore and Royal pad in the State of Karnataka formed part of the route between Bangalore and Cuddapah and was covered by the Scheme, with the result that the First Respondent 's permit for the said portion of the Bangalore Cuddapah route became ineffective and consequent that the vehicles operated by him could not either pick up or set down passengers on the Bangalore Royalpad portion of the Bangalore Cuddapah route though they could traverse the said portion. On January 24,1973, the first respondent made an application to the Second Respondent the Karnataka State Transport Authority for varying the conditions of the stage carriage permit granted to him by increasing the number of trips on the Bangalore Cuddappah route from one trip per day to two trips per day so as to eliminate one overnight halt at either of the two terminal. The said application having been rejected, the First Respondent filed a writ petition No. 3360/74 which was allowed and a mandamus issued to the Second Respondent to dispose of the application in accordance with law holding that the said Scheme did not ope 769 rate as a bar to increasing the number of trips on an existing inter state route. The Second Respondent accordingly invited representation in connection therewith. In the meantime, the Appellant the Karnataka State Road Transport Corporation, filed on November 27, 1974 a writ petition No. 6399/74 to recall the order made in the said writ petition No. 3360/74 and to rehear it after impleading the Appellant as a respondent thereto. The writ petition was dismissed holding that the appellant was not a necessary party to writ petition No. 3360/74. On December 23/24, 1974, the Second Respondent granted to the first respondent the additional trip applied for by him. Against the order of dismissal of the W.P. 6399/74, the Appellant filed, an appeal No. WA 949/1979 under section 4 of the Karnataka High Court Act, 1961 (Mysore Act V of 1962). On a reference by the Division Bench, the Full Bench by its Judgment delivered on September 19, 1979, opined that "If the condition of a permit for operating a stage carriage over a route is altered by increasing the maximum number of trips over that route specified earlier in the permit such variation of the condition of the permit does not amount to grant of a ner permit". The Third Respondent who had been granted three stage carriage permits on three different inter state routes, namely, Bangalore to Cuddapah, Bangalore Kalabasti, and Bangalore to Vellore applied on June 11, 1979 to the Second Respondent for varying the conditions of the said three permits by increasing the number of vehicles by an additional vehicle on each route and by increasing the number of trips from two to four on each route, that is for two round trips, which were granted. The Fourth respondent who did not file any objection to the applications of the Third Respondent filed three writ petitions being writ petitions Nos. 16247 16249 of 1979 in the High Court against the said orders of variations of the Third Respondent 's permits. The writ petitions having been dismissed he preferred three appeals being W.A. Nos. 1285 87/1979 and an application to implead himself as a respondent in WA No.949/74 filed by the appellant, though he had never objected to the grant of the variation to the First Respondent earlier. The writ appeals were dismissed on 22.2.1980. His application to implead himself as a respondent to the said Writ Appeal No. 949/79 was granted. The Fourth Respondent thereafter filed three special leave petitions Nos. 5141 43 of 1979 against the order dated 22.2.1980 dismissing his appeals. He has also filed another special leave petition No. 4771/80 against the Judgment in W.A. No. 949/74 by virtue of his having been allowed to be impleaded by the High Court of Karnataka as third respondent thereto though it was not all necessary since in the writ appeal No. 949 of 1974 which was dismissed on 22.2.1980, the Karnataka High Court granted to the appellant a certificate of fitness to appeal to the Supreme Court. Dismissing the appeal, the Court ^ HELD: 1: 1. Section 57(8) of the does not create a legal fiction and grant of an application for variations in the conditions of a permit in respect of matter set out in section 57(8) does not result in the grant of a new permit. Admittedly the language of sub section (8) is not one which is normally used by legislatures in creating a legal fiction for sub.s. (8) does not state that an application of the nature referred in that sub section is to be deemed to be an application for the grant of a new permit. [787D E] 1: 2. Section 57 is a procedural section. Its various sub sections form 770 an integral whole providing for the manner in which an application for variation of certain conditions of a permit is to be made, the mode of inviting objections thereto and the disposal of such applications and objections. [787E F] 1: 3. Reading sub section (8) in the context of sub sections (3) to (7) and in juxtaposition with them, it is clear that the legislative instant in enacting that sub section was to prescribe the procedure to be followed when an application for variation of the conditions of a permit referred to in that sub section is made, this procedure being the same as is laid down in sub sections (3) to (7) with respect to an application for a new stage carriage permit or a new public carrier 's permit. It is for the purpose of providing that the procedure to be followed in the case of an application made under sub sections (8) is to be the same as the procedure to be followed in the case of an application for a new permit that sub section (8) uses the words "shall be treated as an application for the grant of a new permit. " By the use of these words what sub section (8) does is to incorporate in it the provisions of sub sections (3) to (7). This is a very different thing from enacting a legal fiction. [787B D] East Eng. Dwelling Co. Ltd. vs Finsbury Borough Council, [1951] 2 All. E.R. p. 587, 589 H.L.; quoted with approval. State of Bombay vs Pandurang Vinayak Chaphalkar and others. [1953] S.C.R. p. 773, 778 9; M/s. Shivchand Amolokchand vs Regional Transport Authority and Anr. [1984] I S.C.R. 288=A.I.R. ; followed. Assuming that the application for variation of the conditions of a permit referred to in sub section (8) of section 57 is to be deemed to be by a fiction of law to be an application for a new permit, the question to be considered is for what purpose is such an application to be deemed to be an application for grant of a new permit. Reading sub sections (3) to (8) of section 57 as a whole, it is clear that the only purpose is to apply to such an application for variation the procedure prescribed by sub sections (3) to (7) of section 57 and not for the purpose of providing that when the application for variation is granted, the permit so varied would be deemed to be a new permit. If the permit so varied were to be deemed to be a new permit, the result would be anomalous. [789A C] Ex parte Walton, In Re Levy ; 756 CA; Arthur Hill vs East and West Dock Co. , 456; The Bengal Immunity Co. Ltd. vs The State of Bihar and others, 647; The Commissioner of Income tax, Bombay City, Bombay vs Amarchand N. Shroff [1963] Supp. I S.C.R. 699, 709; Maharani Madalasa Devi vs M. Ramnarayan (P) Ltd. and others; , , 424; Commissioner of Income tax, Gujarat vs Vadialal Lalubhai, ; , 1064; referred to. In the case of an existing inter state permit exempted under the said Scheme an increase in the number of trips or the number of vehicles allowed to he operated under such a permit would not be inconsistent with the provision of the said Scheme. There is no inconsistency between an increase in the number of vehicles or trips allowed under such a permit and the provisions of the said scheme. So far as the portions of the interstate route covered by the said scheme are concerned, the permits of the existing permit holders have been 771 rendered ineffective. Further by the said Scheme as notified by a notification dated January 10, 1980, the existing permit holders are not allowed to pick up or set down passengers on these portions of the notified routes. Whether one vehicle or more traverse these portions or whether the same vehicle traverses such portion more than once cannot in any manner affect the services operated by the Appellant on such portions since no passengers are allowed to be picked up or set down on such portions All that would happen is that these vehicles, in the source of their inter state operation would traverse these portions of the notified routes without in any way operating as stage carriages for such portion . [790C F]

Appeal No. 236 of 1965. Appeal from the judgment and order dated August 30, 1961. of the Bombay High Court in Income tax Reference No. 12 of 1959. A. V. Viswanatha Sastri, N. D. Karkhanis, R. H. Dhebar and R. N. Sachthey, for the appellant. N. A Palkivala, T. A. Ramachandran, J. B. Dadachanji, O. C. Mathur and Ravinder Narain for the respondent. The Judgment of the Court was delivered by Sikri, J. This appeal by certificate granted by the High Court of Judicature at Bombay under section 66 A(2) of the Indian Income Tax Act, 1922, hereinafter referred to as the Act, is directed against its judgment in a reference made to it by the Income Tax Appellate Tribunal. The following two questions were referred (1)Whether on the facts and in the circumstances of the case, the surplus or difference arising as a result of devaluation in the process of converting dollar currency in regard to the sum of $36,123/02 repatriated to India was profit which was taxable in the hands of the assessee ? (2)Whether the said sum of $36,123/02 having been taxed in the relevant earlier years, the surplus or difference in dollar exchange account arising by reason of the repatriation thereof as a result of devaluation was rightly taken as profit taxable ? The relevant facts and circumstances, as stated in the Statement of the Case, are as follows : The respondent, Tata Locomotive and Engineering Co. Ltd., hereinafter referred to as the assessee, is a limited company registered under the Indian Companies Act (VII of 1913), and has its registered office at Bombay. The main business of the assessee is the manufacture of locomotive boilers and locomotives. For the purpose of this manufacturing activity the assessee had to make purchases of plant and machinery, etc., in various countries including the U.S.A. The assessee 2 3 7 appointed M/s Tata Inc., New York, as its purchasing agent in the U.S.A. With the sanction of the Exchange Control Authorities a remittance of $33,830 was made in 1949 to Messrs. Tata Inc., New York for the purpose of purchasing capital goods from the U.S.A. and meeting other expenses connected therewith. The assessee was also the selling agent of Baldwin Locomo tive Works, for the sale of their products in India, and in connection with the sale of the products of Baldwin Locomotive Works in India the assessee had to incur expenses on their behalf in India. These expenses were re imbursed to the assessee by Baldwin Locomotive Works in the U.S.A. by paying the amount due to Messrs. Tata Inc., New York. The amount so paid to Tata Inc. was retained in the assessee 's account with Messrs. Tata Inc. for purchase of capital goods. As the sole selling agent the assessee was entitled to com mission from Baldwin Locomotive Works. The commission pay able to the assessee in dollars was not actually sent from the U.S.A. to India, but with the sanction of the Exchange Control Authorities was made over to the assessee 's purchasing agents, Messrs. Tata Inc., New York. The reason why this was done was explained in the assessee 's letter dated October 26, 1948, to the Reserve Bank of India. In it the assessee stated, inter alia, as follows : "It would be more convenient if the amount of commission payable to us periodically be deposited into our account with our representative, Messrs. Tata Inc., New York, opened with reference to your letter FC.BY. 7031/74/46 dated 2nd October, 1946, as the same would go to reduce the amount of remittance to be made from here in recoupment of that amount from time to time. These amounts will be utilised solely for the purposes detailed in our letter to you TC 679 dated 15th August, 1946. " The purposes referred to in the said letter of August 15, 1946, were purchase of capital goods. The amount received as commission was taxed in the relevant assessment years on the accrual basis and tax has been paid. On September 16, 1949, there was a balance of $48,572/30 in the assessee 's account with Messrs. Tata Inc. made up as under (1) Remittances from Bombay $33,850 00 Less : Dollars spent in the U.S.A. for capital $30,282. 96 purposes $3,567.04 238 (2) Amount reimbursed by Baldwin Loco $8,882.24 motive Works against funds made available to its representatives in India (3) Commission actually received from Baldwin Locomotives Works and retain $36,123. ed in the U.S.A. TOTAL $48, 572.30 On September 16, 1949, the pound sterling was devalued. Prior to the devaluation the rate of exchange between rupee and dollar was Rs. 3.330 per dollar and on devaluation the rate became Rs. 4.775 per dollar. The result was that the assessee found it more expensive to buy American goods and as the Government of India also imposed some restrictions on imports from the U.S.A., the assessee decided to repatriate the dollars and for the purpose applied to the Reserve Bank of India on December 17, 1949. The Reserve Bank of India gave permission and a sum of $40,000 was repatriated to India. Under similar circumstances in October, 1950, a sum of $9,500 was repatriated to India. Though the two remittances from the U.S.A. to India of $40,000 and $9,500 fell into different accounting years, the case proceeded before the Income tax authorities as well as before the Tribunal on the footing that the two remittances be considered as falling in the accounting year ended March 31, 1950 for the purpose of the appeal before the Tribunal. The remittances of $49,500 includes the sum of $48,572/30 that was held by the assessee on September 16, 1949. This repatriation of the sum of $48,572/30 gave rise to a sum of Rs. 70,147 as surplus in the process of converting dollar currency into rupee currency. The Income tax Officer assessed the amount of Rs. 70,147 on the ground that it represented profits that arose to the assessee "incidentally to its carrying on the business". The Income tax Officer observed : "Whether the funds were sent to America with the object of purchasing of capital equipment or for the purchase of stores, or for reimbursement of revenue expenditure there need not be distinction that only such portion of the profits arising on funds remitted for revenue expenditure only has to be treated as revenue and the balance should be treated as capital. " The Appellate Assistant Commissioner substantially affirmed the odrer of the Income tax Officer except that he reduced 239 the amount by Rs. 6,894. He was of the view that the permission of the Reserve Bank by itself did not convert the true nature of the amount lying there. He was further of the view that the amounts available for remittance consisting of the commission and the reimbursement of expenses by Baldwin Locomotive Works were acquired in the ordinary course of business of the sole selling agency of Baldwin Locomotive Works, and, therefore. any exchange profit on such amounts which formed part of the assets employed as circulating capital in trade did arise directly in the course of business and formed part of the trading receipts. The Tribunal held that the sums of $3,567/04 and $8,882/24 included in the sum of $48,572/30 were held by the assessee for capital purposes and hence any profit that arose to it as a result of its conversion into rupee currency on account of appreciation of the dollar, in relation to the rupee, must be held on capital account and, ' accordingly, the Tribunal excluded ' profits attributable to these amounts. But regarding the sum of $36,123/02 the Tribunal held that it would not be justified in coming to the conclusion that there was any constructive remittance, first in the direction the U.S.A. to India and then of an equivalent sum from India to the U.S.A. It further held that "the amount was earned as commission. It was received in dollars and was retained in that form for the changed purpose under the authority of the Reserve Bank of India. When the Company found that the purpose for which it was to be used failed, viz., acquisition of capital equipment etc. , it requested the Reserve Bank of India to permit it to bring to India, vide assessee 's letter dated 17 12 1949 where it sought Reserve Bank 's permission to bring $40,000 to India and referred to in paragraph above. This permission was granted by the Reserve Bank. Dollars were changed into rupees and money received here. Hence before there was actual remittance of $40,000 from the U.S.A. to India, there was reconversion, the purpose having failed, of the sum if there was initial conversion as contended by Mr. Chokshi. " In the alternative, the Tribunal held that "as and when the commission was earned in dollars, the Company did bring it into its account books in the rupee currency at the then prevailing rate of exchange but the commission amount physically remained in the U.S.A. and when occasion arose to bring it physically to India it had to be converted into rupee currency and this conversion was necessarily incidental to the asssessee 's business as selling agents of the foreign entity the Baldwins. Hence whatever the profit the Company made on such exchange of the commission earned by it in the course of its 2 4 0 selling agency business must be brought to tax as a trading profit made by it incidentally in the course of that business. " The High Court answered the two questions in the negative. It held that although the character of the commission earned was at the inception that of income, but when the assesee appropriated that sum for the specific purpose of purchasing capital goods with the permission of the Reserve Bank of India, the initial character of this sum underwent a change and it assumed the character of fixed capital of the Company. This character was retained right up to September 16, 1949 when the pound sterling was devalued, and it did not undergo any change till the benefit accrued on this amount to the assessee company as a result of change in the exchange rate. The High Court further held that "there is no evidence in this case nor a finding recorded by the Tribunal that the assessee company had at any time decided not to utilise these amounts for the purpose of purchasing capital goods, and, therefore, repatriated these amounts to India." The High Court further held that the sum of $36,123 02 was "part of its fixed capital and remained so till the date it was repatriated to India. The surplus or difference arising as a result of devaluation in the process of converting these dollars into rupee currency in repatriating them to India was an accretion to its fixed capital and was not, therefore, liable to tax. " The High Court felt that the ratio of the decision in Davies vs The Shell Company of China(1) supported the view it had taken. The learned counsel for the revenue, Mr. A. V. Viswanatha Sastri, contends that if the commission had been allowed to remain in the U.S.A. up to September 16, 1949, and it had been repatriated on September 17, 1949, the assessee would have been liable to tax on the profits received as a result of devaluation. He says that if this is so, the permission of the Reserve Bank and the decision of the Company to hold it to buy capital goods does not make any difference. He further says that the fact that the assessee credited the rupee equivalent of this sum in his books and paid tax on the basis of accrual does not also make, any difference. The learned counsel for the assesee, Mr. Palkhiwala, on the other hand contends that the assessee is not a dealer in foreign exchange and it had not acquired or held foreign exchange for revenue purposes or for purposes incidental to trading operations. He says that "when foreign currency is kept or used on capital account e.g. to acquire capital assets, and not as circulat (1) 22 I.T.R. Supp. 1. 2 4 1 ing capital, the profit made on realisation is capital appreciation, even though the foreign currency may have been originally acquired as a revenue receipt. " A number of cases have been cited before us, but it seems to us that the answer to the questions depends on whether the act of keeping the money, i.e. $36,123 02 for capital purposes after obtaining the sanction of the Reserve Bank was part of or a trading transaction. If it was part of or a trading transaction then any profit that would accrue would be revenue receipt; if it was not part of or a trading transaction then the profit made would be a capital profit and not taxable. There is no doubt that the amount of $36,123.02 was a revenue receipt in the assessee 's business of commission agency. Instead of repatriating it imme diately the assessee obtained the sanction of the Reserve Bank to utilise the commission in its business of manufacture of locomotive boilers and locomotives for buying capital goods. That was quite an independent transaction and it is the nature of this transaction which has to be determined. In our view it was not a trading transaction in the business of manufacture of locomotive boilers and locomotives; it was clearly a transaction of accumulating dollars to pay for capital goods, the first step to the acquisition of capital goods. If the assessee had repatriated $36,123.02 and then after obtaining the sanction of the Reserve Bank remitted $36,123.02 to the U.S.A., Mr. Sastri does not contest that any profit made on devaluation would have been a capital profit. But, in our opinion, the fact that the assessee kept the money there does not make any difference especially, as we have pointed out, that it was a new transaction which the assessee entered into, the transaction being the first step to acquisition of capital goods. In the view we have taken it is really not necessary to discuss cases cited at the Bar because none of the cases are exactly in point. In our view the High Court was right in answering the questions in the negative. In the result the appeal fails and is dismissed with costs. Appeal dismissed.

The assessee was a limited company with its registered office at Bombay. Its main business was the manufacture of locomotive boilers and locomotives, and for that purpose the assessee had to make purchases of plant and machinery, in various countries including the U.S.A. The assessee appointed M/s. Tata Inc., New York, as its purchasing agent in the U.S.A. The assessee was also the selling agent of Baldwin Locomotive Works, U.S.A., for the sale of their products in India, and the commission payable to the assessee as their sole selling agent was made over to the assessee 's purchasing agent in Now York with the sanction of the Reserve Bank and for the purchase of capital goods. This amount was taxed in the relevant assessment years on the accrual basis and the ix was paid. On 16th September 1949, the pound sterling was devalued and the rate of exchange between rupee and dollar which was Rs. 3.33 per dollar before devaluation, became Rs. 4.775 per dollar thereafter, On 'hat date, there was in the assessee 's account with the purchasing agent a sum of $ 36,123.02 representing the commission received from Baldwin locomotive Works. With the permission of the Reserve Bank this sum was repatriated to India in 1950 and the change in the exchange rate gave these to a surplus in rupees. The Income tax Officer, the Appellate Assisant Commissioner and the Appellate Tribunal held that this surplus amount was liable to tax. The High Court, on a reference, held that the sum was not taxable in the hands of the assessee. In appeal to this Court, it was contended that the assessee was liable 3 tax because; (i) if the commission bad been allowed to remain in the J.S.A. up to 16th September 1949 and had been repatriated on 17th September, the assessee would have been liable to tax and therefore the Permission of the Reserve Bank and the decision of the assessee to hold to buy capital goods did not make any difference; and (ii) the fact hat the assessee credited the rupee equivalent of the sum in his books and paid tax on the basis of accrual did not also make any difference to the ssessee 's liability. HELD:The High Court was right in deciding in favour of the assessee. The assessee 's liability to tax would depend on whether the 'act of seeping the money for capital purposes after obtaining the sanction of he Reserve Bank was part of or a trading transaction. The amount no doubt, was a revenue receipt in the assessee 's business of commission agency. But instead of repatriating it immediately, the assessee obtained the sanction of the Reserve Bank to utilize the commission for buying capital goods, and that was an independent transaction. It was not a 236 trading transaction but was a transaction of accumulating dollars to pay for capital goods, the first step to the acquisition of capital goods. if the assessee had repatriated the amount and then, after obtaining the sanc tion of the Reserve Bank, remitted it to the U.S.A. any profit made on devaluation would only be a capital profit. therefore, the fact that the assessee kept the money b e n the U.S.A. did not make any difference under the circumstances. [241 B P]

ivil Appeal No. 523 (NT) of 1975. From the Judgment and Order dated 31.1.1974 of the High Court of Kerala in Tax Reference Case No. 52 of 1971. T.S. Krishnamurthy Iyer and P.K. Pillai for the Appellant. G. Vishwanath Iyer and N. Sudakaran for the Respondent. The Judgment of the Court was delivered by KANIA, J. This is an appeal against a judgment of a Division Bench of the High Court of Kerala under the provisions of the Kerala General Sales Tax Act, 1963 and Tax Reference Case No. 52 of 1971 filed pursuant to special leave granted by this Court. The Appellant before us is the M/s Alwaye Agencies and the respondent is the Dy. Commissioner of Agricultural Income tax and Sales Tax, Ernakulam. The assessee firm was appointed as Distributor by the Travancore Cochin Chemicals Ltd. (referred to hereinafter as the "said company") to effect the sale of Sodium Hydrosulphite manufactured by the said company in the area covered by the Kerala State under an agreement entered into on 11th February, 1967. The dispute pertains to the transactions which took place between 1st September, 1967 and 20th December, 1968 since it is an undisputed that the transactions upto the former date are not taxable. It is common ground that the relations between the parties were governed throughout by the said agreement and that the parties adhered to the terms of the said agreement. In view of this it would be desirable to examine that agreement at this stage. As aforesaid, the agreement is dated 11th February, 1967. Under the agreement, the assessee firm was appointed as Distributor for the aforesaid product manufactured by the company for the area covered by the Kerala State. Clause 2 of the agreement provides that the distributorship was on an exclusive basis giving the distributor the right of sale of the product within the aforementioned area and that supplies would be made only direct to the distributor, Sub clause (a) of clause 2 further provides: 882 "However, when on the advice of the distributor bulk supplies are effected in waggon load or lorry load lots the Company may effect supplies direct to the consumer, provided that the distributor arranges the payment as per the clause hereinafter mentioned and also takes the responsibility to bear entirely the resultant effects and risks from effecting such direct despatches. " Sub clause (b) of the said clause provides that the company reserves the right to effect the sale of Sodium Hydrosulphite to anybody and anywhere in India direct. Under Clause 4, the price which the distributor would be entitled to charge to the consumer was fixed by the company and it was provided that the distributor will sell the materials to the clients or consumers at the said price plus certain costs incurred by the distributor. Cluase 6 provides that the said company would grant the distributor a rebate of 3% on the ex factory selling price, which the company was entitled to determine as aforesaid. This rebate was liable to be paid to the distributor only at the end of the month when the statement of the account would be settled. Under Clause 7, the distributor was liable to guarantee the minimum off take of the said product. Clause 8 of the agreement provides for mode of payment by the assessee (distributor) to the said company, and very briefly stated, it provides that the assessee would arrange for effecting payment either in cash or by Demand draft payable at par, or, alternatively, would open an irrevocable letter of credit in favour of the said company negotiable against R/R or other documents of despatch of goods. It is provided that the letter of credit would cover the value of goods as well as charges of transport for booking the goods to destination station, Sales tax and other expenses including cost of insurance, if any, effected at the distributor 's request. An alternative mode of the payment is provided to the effect that the assessee as distributor must remit 10% of the full value by Demand Draft and retire the documents of despatch of goods sent to the assessee through bank for collection from the bank. Clause 8 further provides if the documents sent by the said company are not retired within the stipulated time, interest would be payable by the distributor on the amount due at the rate of 12% per annum. The clause also makes it clear that if the second mode of payment is adopted by the assessee, consignments would be insured by the said company against transit risk and the insurance charges would have to be borne by the assessee. It may be noted at this stage that the Tribunal has found as a fact that in respect of the said transactions 883 from 1st September, 1967 to 20th December, 1968, the invoices were prepared by the said company in the names of the consumers of goods and the goods were consigned to the destinations through public carriers booked "self". The transport bills were endorsed and handed over by the said company to the assessee. From 20th December, 1968, goods were consigned to the destination showing the assessee as consignor. But we are not concerned with the period from 20th December, 1968. In the assessment of the assessee for the period 1967 68 under the Kerala General Sales Tax Act, 1963, the final assessment was initially completed on 27th September, 1968 and a turnover of Rs.70,952.61 as reported by the assessee was accepted and tax levied on that basis. Thereafter, it was alleged by the Assessing Authority that the transactions in the aforesaid period, which had taken place in the manner set out earlier, had been wrongly excluded from the turnover reported by the assessee in the return and hence that turnover has escaped assessment. The contention of the assessee that these transactions did not constitute sales by the said company to the assessee was not accepted and hence it was held by the Assessing Officer that the said turnover was liable to be included in the taxable turnover of the assessee, as escaped turnover. An appeal preferred by the assessee to the Appellant Assistant Commissioner was dismissed. In a Second Appeal to the Tribunal, the Tribunal took the view, by majority, that the aforesaid transactions had taken place directly between the said company and the consumers and the assessee was merely an agent of the company in respect thereof. The Tribunal allowed the appeal and directed the aforesaid transactions to be excluded from the taxable turnover of the assessee. On a revision to the High Court under Section 41 of the said Act, the Division Bench of the High Court took the view that the Tribunal was wrong in coming to the conclusion that the assessee was acting only as an Agent in respect of the aforesaid transactions between the said company and the consumers and allowed the Revision Application. The Division Bench of the High Court considered several cases which were cited before the Division Bench and held that the test to determine whether there is a sale or not is to find out whether there is transfer of property. It further pointed out that the question whether there has been transfer of property must necessarily depend upon an appreciation of the rights and obligations of the parties under the contract. If the property is transferred, unless there is a specific stipulation to the contrary, any risk of loss or injury to the goods would, thereafter, be not in the seller but in the buyer. They further pointed out that the delivery may be either to the distributor himself or to his 884 nominee; the nominee could be the person whose orders are booked by the distributor. They pointed out that in the present case even when the goods were despatched by the said company to the address of the customers, whose orders were booked by the distributor, namely, the assessee, the documents of title were not delivered to the customers, but handed over to the distributor on receipt of price, or the documents of title were endorsed in favour of the distributor and sent through the banks to be honoured by the distributor by payment. In such cases, where there was some time lag between the despatch of goods and the entrustment of documents of title on receiving payment through the bank, care was taken to stipulate that the risk would be covered by insurance which would be at the cost of the distributor. The Division Bench further pointed out that in the said agreement, the distributor had not been referred to as "Agent" but as "Distributor" and that this was also significant although not conclusive. It was on the basis of these conclusions that the High Court reversed the decision of the Tribunal and allowed the Revision Application. In our opinion, since both the parties have proceeded on the footing that the transactions in question were effected pursuant to the said agreement, the primary task to which we must address ourselves is to examine whether under the agreement the assessee firm was an agent of the said company, or whether the assessee firm was really a purchaser of the goods which were booked by it. In this connections, it must be noticed that under sub clause (a) of Clause 2 provides that the distributor has the right of the sale of the product within the stipulated area. Bulk supplies were effected in waggon load or lorry load by the said company direct to the consumer, but only provided that the distributor arranged the payment as per the agreement and also took the responsibility to bear entirely the resultant effects and risk from said direct despatches. It is true that the price at which the goods were to be sold to the customers was fixed by the company but that itself does not necessarily lead to the conclusion that the assessee acted merely as an agent of the said company. In fact, it is well settled that the mere fact that the manufacturer fixes the sale price, by itself, cannot lead to the conclusion that the distributor is merely an agent. It is significant that under the agreement what the distributor got is described as a "rebate" and not as "commission", as one would normally expect in an agreement of agency. This is a factor which is by no means conclusive, but to a certain extent indicative of the relationship between the said company and the assessee. What is most important is, however, that the supplies were made to the distributor against payment either immediate or deferred as provided in the agreement, and even when 885 the goods were destined directly to the customer, it was the distributor who had to guarantee to arrange the payment. Clause 8 makes it quite clear that the arrangement for effecting payment had to be made by the distributor either in case of by demand draft or by irrevocable letter of credit in the company 's favour negotiable against R/R or other documents of despatch of goods. It is also significant that where there was some time lag between the sending of the goods and the payment, the goods were to be insured at the cost of the assessee. This circumstance, in our opinion, clearly shows that in respect of the goods dispatched under orders placed by the distributors, the distributors really acted as purchasers of the goods which they in turn sold to the customers and did not merely act as agents of the said company. In respect of the goods in question which were despatched through public carriers, although the invoices were prepared in the names of the consumers of the goods, and the goods were consigned to the destination through public carrier booked to self, as pointed by the Tribunal and the bills were endorsed and handed over to the assessee. When considered in the light of the agreement, these circumstances clearly shows that in respect of these transactions the property in the goods dispatched passed to the distributor on the bills being endorsed and handed over to the distributors. Our attention was drawn by Shri Krishnamurthy Iyer, learned counsel for the assessee (appellant) to the decision of this Court in The Bhopal Sugar Industries Ltd. vs Sales Tax Officer, Bhopal, [1977] 3 S.C.C. p. 147 where the question was whether the contract was one of agency or sale. This Court held that the question will have to be determined having regard to the terms and recitals of the agreement, the intention of the parties as may be spelt out from the terms of the document and the surrounding circumstances and having regard to the course of dealings between the parties. While interpreting the terms of the agreement, the Court has to look to the substance rather than the form of it. The mere fact that the word 'agent ' or 'agency ' is used or the words 'buyer ' and seller ' are used to describe the status of the parties concerned is not sufficient to lead to the irresistible inference that the parties did in fact intend that the said status would be conferred. We are in complete agreement with the principles laid down in this decision. We may point out that although we have referred to the assessee being described in the agreement as "distributor" and not as "agent" and to the fact that what they got was described as "rebate" and not "commission", we have not treated these circumstances as in any manner decisive. In our view, however, these descriptions considered in the light of the general tenor of the agreement and the 886 circumstances surrounding the transactions between the parties show that the assessee was not agent, but really a purchaser from the company in respect of the goods in question. Learned counsel for the appellant also drew our attention to a passage in Pollack & Mulla 's Commentary on the Sale of Goods and Partnership Acts, (4th Edition at page 114) where the learned authors have cited with approval the statement of Lord Justice Cotton to the effect that when the vendor on shipment takes the bill of lading to his own order, he has the power of absolutely disposing of the cargo, and may prevent the purchaser from ever asserting any right of property therein. Lord Justice Cotton observed that in such cases the purchaser had no property in the goods, though he had offered to accept bills or had paid the price. These observations, however, in our view, have no application to the case before us, because in the case before us, although the goods were consigned to the self, the documents relating to the despatch of goods, namely R/R or other documents of title were endorsed in favour of the assessees and handed over to them on payment or were sent to the assessees through the bank for collection. We may mention that it was urged by learned counsel for the respondent,in the alternative, that, although sub section 21 of Section 2 of the Kerala General Sales Tax Act defines sale in a manner similar to the definition of the said term under the Sale of Goods Act, Explanation 5 to sub section 21 of Section 2 provides that two independent sales or purchases shall, for the purposes of that Act, be deemed to have taken place in the circumstances set out in that explanation. A perusal of the said explanation shows that such independent sales or purchases take place, inter alia, where the goods are transferred from a principal to his selling agent and from the selling agent to the purchaser. It was submitted by him that in view of this explanation, even ifthe appellant firm was merely the agent of the said company in respect of the transactions in question, there were two sales which must be deemed to have taken place in respect of each of the transactions for the purposes of the said Act; one from the said company to the appellant and the other from the appellant to the respective consumer; and that the sale from the said company to the appellant was liable to be included in the taxable turnover of the assessce. In ourview, it is not necessary to consider this submission, because, according to us, in view of the said agreement, considered in the light of the surrounding circumstances, the assesseeas distributor was not an agent of the said company in respect of the transaction in question, but was the pur 887 chaser and hence the transactions were liable to be included in the turnover of the assessee. In the result, we find that there is no merit in the appeal and the appeal must stand dismissed with costs. There will be an order accordingly. S.L. Appeal dismissed.

This appeal arose out of a case under the Kerala General Sales Tax Act. The assessee firm (assessee) had been appointed as distributor by the Travancore Cochin Chemicals Ltd. (the "said company") to effect sale of their product under an agreement. In the assessment of the assessee firm for the period 1967 68 under the Kerala General Sales Tax Act, final assessment was completed and the turnover as reported by the assessee was accepted and tax, levied on that basis. Later, the assessing authority alleged that certain transactions in the aforesaid period had been wrongly excluded from the turnover reported by the assessee in the return and the turnover had escaped assessment. The contention of the assessee that the transactions did not constitute sales by the said company to the assessee was rejected by the Assessing Officer and it was held that the said turnover was liable to be included in the taxable turnover as escaped turnover. An appeal by the assessee to the Appellate Assistant Commissioner was dismissed. In second appeal to the Tribunal, the Tribunal held that the transactions in question had taken place directly between the said company and the consumers and the assessee was merely an agent of the company, and allowed the appeal. The High Court on revision held that the Tribunal was wrong in concluding that the assessee was acting only as an agent in respect of the said transactions between the said company and the consumers, and allowed the Revision Application. The assessee firm appealed to this Court by special leave against the decision of the High Court. Dismissing the appeal, the Court, ^ HELD: Both the parties proceeded on the footing that the transactions in question were effected pursuant to the agreement, sub clause (a) of clause 2 whereof provided that the distributor had the right of sale 880 of the product within the stipulated area. Bulk supplies were effected in waggon load or lorry load by the said company direct to the consumer pursuant to orders booked by the assessee firm. The distributor arranged the payment as per the agreement and also took the responsibility to bear entirely the resultant effects and risk from the said direct dispatches. It was true that the price at which the goods were to be sold to the customers was fixed by the company but that did not lead to the conclusion that the assessee acted merely as an agent of the said company. The mere fact that the manufacturer fixes the sale price by itself cannot lead to the conclusion that the distributor is merely an agent. Under the agreement, what the distributor got was described as a "rebate" and not "Commission", as is normally expected in an agreement of agency. This is a factor, by no means conclusive, but to a certain extent indicative of the relationship between the said company and the assessee. More important, the supplies were made to the distributor against payment immediate or deferred as provided in the agreement, and even when the goods were destined directly to the customer, the distributor had to guarantee to arrange the payment, as per clause 8. Where there was some time lag between the sending of the goods and the payment, the goods were to be insured at the cost of the assessee. This circumstance clearly showed that in respect of the goods dispatched under orders placed by the distributors, the distributors really acted as purchasers of the goods which they in turn sold to the customers and did not merely act as agents of the said company. In respect of the goods in question, despatched through public carriers, although the invoices were prepared in the names of the customers of the goods and the goods were consigned to the destination through public carrier booked to self, the bills were endorsed and delivered to the assessee. In the light of the agreement, these circumstances clearly showed that in respect of these transactions the property in the goods dispatched passed to the distributors on the bills being endorsed and handed over to the distributors. [884D H;885A D] Although the Court had referred to the assessee being described in the agreement as "distributor" and not as "agent" and to the fact that what they got was described as "rebate" and not "commission", the Court had not treated these circumstances as decisive. But these descriptions considered in the light of the general tenor of the agreement and the circumstances surrounding the transactions between the parties showed that the assessee was not an agent but really a purchaser from the company in respect of the goods in question, and the transactions were liable to be included in the turnover of the assessee. [885G H;886A] 881 The Bhopal Sugar Industries Ltd. vs Sales Tax Officer, Bhopal, ; ;and Pollack & Mulla 's Commentary on the Sale of Goods & Partnership Acts, 4th Edition, p. 114, referred to.

minal Appeal No. 109 of 1960. Appeal by special leave from the judgment and order dated April 18, 1958, of the Andhra Pradesh High Court in Criminal, Misc. Petition No. 1421 of 1957. H. J. Umrigar and T. M. Sen, for the appellant. The respondent did not appear. March 8. The Judgment of the Court was delivered by MUDHOLKAR, J. The State of Andhra Pradesh has come up in appeal against the order passed in revision by the high Court of Andhra Pradesh quashing the charges framed against nine persons by Mr. Syed Firasath Hussain, Special Judge, Vijayawada. The revision petition was preferred by only two of those persons. The accused No. 1 Parthasarathi, who was a lower division clerk in the Central Excise Circle Office at Narasaraopet was in charge of the TP 1 permit books (transport permit) intended for issue to Central Excise Officers for granting permits to persons applying bona fide for licences to transport tobacco. According to the prosecution two of those books containing 25 permit forms each were found missing from the aforesaid office. The allegation is that Parthasarathi sold those books to the remaining accused for a consideration of Rs. 400. It was found during the investigation that seven permit forms from out of these books bad been used for transport of non duty paid tobacco after blanks in those forms had been filled and the signa tures of certain Central Excise Officers forged on them. Further, according to the prosecution, accused nos. 2 to 8 got authorisation letters prepared with the help of accused No. 9 'by forging the signatures of the supposed consignors of the tobacco. With the help of 197 these documents the accused nos. 2 to 8 are said to have transported tobacco to the licensed premises of certain persons and received payments for the tobacco delivered to them. The prosecution alleged that all this was done by all the accused by entering into a conspiracy, the object of which was to procure and utilise blank TP 1 forms, fill them in, forge the signatures of Central Excise Officers and use them as genuine for the purpose of transporting tobacco without paying duty upon it. The charge sheet states that the accused nos. 1 to 9 have committed the offence under section 120 B, Indian Penal Code read with a. 5(2) of Prevention of Corruption Act, 1947 (II of 1947). It further states that the accused No. 1 had committed offenses under section 5(1)(c) and 5(1)(d) of Prevention of Corruption Act, 1947 as also offenses under sections 420, 463 and 464, Indian Penal Code. The accused nos. 2 to 8 are said to have abetted all these offenses. Each of these accused is in addition said to have committed offenses under section 420, Indian Penal Code. The Subordinate Judge, Vijayawada was appointed as Special Judge under the provisions of section 6 of the Criminal Law Amendment Act, 1952 (II of 1952) to try offenses under the Prevention of Corruption Act, 1947. He framed the following charges: "CHARGE NO.1. That you, Accused 1 to 9 on or about 19 9 1953 to 5 11 53 agreed to do by illegal means to wit, A 1 being a public servant in the Central Excise Department dishonestly sold two blank T.P. 1 books for Rs. 350 to one late Jogayya and obtained pecuniary advantage for himself and A 2 to A 8 and that A 9 forged 7 T.P. 1 forms, out of the above two books, which forged T.P. 1s were used by A 2, A 3, A 5, A 7, A 8 with the assistance of A 4 and A 6 and cheated the merchants of Markapur and Cumbum by using the said forged T.P. 1s for the above purpose of cheating; and that the above acts were done by all of you in pursuance of a conspiracy and that thereby you A 1 have committed an offence punishable under Section 120B of the I.P.C. read with and (d) punishable under Sec. 5(2) of the Prevention of Corruption Act and also under Sec. 109 I.P.C. read with Sec. 490, 466 and 467 of the I.P.C. and that you,A 2 to A 9 under See. 120 B read with Sec. 5(1)(c) and (d) punishable under See. 5(2) of Act 11 of 1947 and See. 420, 466 and 467 and 471 I.P.C. and within my cognizance. CHARGE NO. That you A 1, being a public servant in the Central Excise Department, being a Lower Division Clerk in the office of the Superintendent of Central Excise, Narasaraopet Circle, since 1951 and in such capacity were entrusted since 1951 with blank T.P. 1 books dishonestly sold two of the above said T.P. 1 books under your control to one late Jogayya for Rs. 350, in or about the month of April, 1953 and dishonestly, fraudulently misappropriated the said amount and thereby committed the offence of misconduct punishable under Section 5(2) read with See. 5(1)(c) of the Prevention of Corruption Act, 11 of 1947 and within my cognizance. CHARGE NO. 111. That you A 1, in the above capacity, by corrupt and illegal means, and by abusing your position as a public servant, obtained for yourself an amount of Rs. 350 being the sale proceeds of the two Blank T.P. 1 books, from one late Jogayya and obtained for A 2 to A 8, a pecuniary advantage of Rs. 10,120 14 0, th e amount of revenue due to the Central Govern ment and thereby committed the offence of Criminal misconduct punishable under See. 5(2) read with Sec. 5(1)(d) of the Prevention of Corruption Act 11 of 1947 and within my cognizance. CHARGE TO. That you, A 9, on or about the days between September and November, 1953 forged 7 blank T.P. ls Nos. 610432, 610443, 610460,610448,61044, 610468, 610446 as if they are documents to have been made by the Central Excise Officials in their official capacity by filling up the same within false particulars and fixing the signatures of different 199 Central Excise Officials so as to show that they are genuine T.P. 1 permits 'hat you thereby committed an offence punishable under Section 466 I.P.C. and within my cognizance. CHARGE No. V. That you, A p, on or about the days between September and November, 1953 forged the 7 T.P. 1 permits mentioned in Charge No, IV purporting to be valuable securities with intent and that they may be used for transporting tobacco as duty paid tobacco and that you thereby committed an offence punishable under Section 467 of the I. P. C. and within my cognizance. CHARGE No. VI. That you, A 2 to A 8, on, or about the days between 12 9 53 and 5 11 53 at Chodavaram, Satulur, Velpur and Tenali dishonestly used the above seven forged T.P. Is mentioned in Charge No. IV as genuine, Which you know at the time you used them as forged documents and transported 26,989 lbs. non duty paid tobacco as duty paid tobacco by quoting the above fictitious documents as proof of payment of duty and that you ' thereby committed an offence punishable under Section 465 and 471 of the I.P.C. and within my cognizance. CHARGE No. VII. That you, A 2 to A 8, on or about the days between 19 9 53 and 6 11 53 at Cumbum and Mar kapur cheated (1) B. Ranga Subbayya of Cumbum (2) P. C, h. Venkata Subbaiah and (3) Shri B. Seshaiah of Markapur and thereby dishonestly inducing them to deliver you, Rs. 10,994 10.3, was the property of the above said persons; and that you thereby committed an offence punishable under Section 420 I.P.C. and within my cognizance. " While seven of the accused persons were content with the charges,, two preferred an application for revision before the High Court which, as already stated, accepted it and quashed the charges and directed the Special Judge to frame fresh charges on the lines indicated in the judgment. 200 Mr. Umrigar, who appears for the State of Andhra Pradesh, while conceding that Charge No. 1 as it stands, is involved and obscure and requires to be reframed takes exception to the observation of the High Court that the charge is bad for multiplicity. ,It not quite clear what the High Court me ant. If it meant that separate charges should be framed for different offenses there can be no objection; but if it meant that all these accused cannot be tried at the same trial then we have no doubt that it was in error. The High Court pointed out that this is an omnibus charge containing as many as 203 offenses and that it is 'in direct violation of sections 234, 235 and 239 of the Code of Criminal Procedure. No doubt, sub section (1) of section 234 provides that not more than three offenses of the same kind committed by an accused person within the space of 12 months can be tried at the same trial. But then section 235(1) provides that if in any one series of acts so connected together as to form the same transaction more offenses than one are committed by the same person, he may be charged with and tried at one trial for every such offence. Therefore, where the alleged offenses have been committed in the course of the same transaction the limitation placed by section 2314(1) cannot operate. No doubt, the offence mentioned, in charge No. 1 is alleged to have been committed not by just one person but by all the accused and the question is ' whether all these persons can be jointly tried in respect of all these offenses". To this kind of charge s.239 would apply. This section provides that the following persons may be charged and tried together, namely: (1) persons accused of the same offence committed in the course of the same transaction; (2) persons accused 'of an offence and persons accused of abetment or an attempt to commit such an offence; (3) persons accused of different, offenses committed in the course of the same transaction. Clearly, therefore, all the accused persons could be tried together in respect of all the offenses now comprised in charge No. 1. We, however, agree with 201 Mr. Umrigar that it would be desirable to split up charge No. 1 suitably go that the accused persons will not be prejudiced in answering the charges and in defending themselves. The learned Judge has hold, following a decision of a single Judge in In re Venkataramaiah (1) that no charge of conspiracy is permissible for committing which the conspiracy was entered into and which had actually been committed. In that case the learned Judge had observed as follows at p. 132: "Where the matter has gone beyond the stage of more conspiracy and offences are alleged to have been actually committed in pursuance thereof, these two sections are wholly irrelevant. Conspiracy, it should be borne in, mind, is one form of abetment (see section 107 I.P.C.) and where an offence is alleged to have been committed by more than two persons, such of them as actually took part in the commission should be charged with the substantive offence, while those who are alleged to have abetted it by conspiracy should be charged with the offence of abetment under section 109 I.P.C. The Explanation to section 109 makes this quite clear. An offence is said to be committed in consequence of abetment, when it is committed in pursuance of the conspiracy, and the abettor by conspiracy in made punishable (under section 109) with the punishment provided for the actual offence. " We are unable to accept this view. Conspiracy to commit an offence is itself an offence and a person can be separately charged with, respect to such a conspiracy. There is no analogy between section 120B and section 109 I.P.C. There may be an element of abetment in a conspiracy; but conspiracy is something more than an abetment. Offences created by section 109 and 120B, I.P.C. are quite distinct and there is no warrant for limiting the prosecution to only one element of con spiracy, that is, abetment when the allegation is that what a person did was something over and above that. Where,& number of offences are committed by (1) A.I.R. 1935 Mad. 130, 132. 202 several persons in pursuance of a conspiracy it is usual to charge them with those, offences as well as with the offence of conspiracy to commit those offences. As an instance of this we may refer to the case in section Swaminatham vs State of Madras (1). Though the point was not argued before this Court in the way it appears to have been argued before the Madras High Court and before the High Court of Andhra Pradesh, this Court did not see anything wrong in the trial of several persons accused of offences under section 120B and section 420 I.P.C. We cannot, therefore, accept the view taken by the High Court of Andhra Pradesh that the charge of conspiracy was bad. If the alleged offences are said to leave flown out of the conspiracy the appropriate form of charge would be a, specific charge in respect of each of those offences along with the charge of conspiracy. Before leaving this point we would like to refer to the decision in R. vs Dawson (2) which Mr. Umrigar very fairly brought to our notice, respondents being ex parte. In that case Finnemore J. who delivered the judgment of the Court observed: "Now with regard to the first count for con spiracy. . this court feels it is desirable 'Jo say something. This court has more than once warned of the dangers of conspiracy counts, especially these long Conspiracy counts, which one counsel referred to as a mammoth conspiracy. Several reasons have been given. First of all if there are substantive charges which can be proved, it is in general undesirable to complicate matters and to lengthen matters by adding a charge of conspiracy. Secondly, it can work injustice because it means that evidence, which otherwise would be inadmissible on the substantive charges against certain people, becomes inadmissible. Thirdly, it adds to the length and complexity of the case so that the trial may easily be well High unworkable and impose a quite intolerable strain both on the Court and on the jury. The learned Judges in fact quashed the conviction (1) A.I.R. 1957 S.C. 340, 343, 344. (2) [1960] 1 All. E.R. 558, 563. 203 for conspiracy in the case before them. We agree that it is not desirable to charge the accused persons with conspiracy with the ulterior object of letting in an evidence which would otherwise be inadmissible and that it is undesirable to complicate a trial by introducing a large number of charges spread over a long period. But then this is only a question of propriety and it should be left to the Judge or the magistrate trying the case to adopt, the course which he thinks to be appropriate in the facts and circumstances of the case. It cannot be said as a matter of law that such a trial is prohibited by the Code of Criminal Procedure. The High Court has further held that the learned Special Judge had no jurisdiction to try the offences under section 120B read with sections 466, 467 and 420 because he was appointed a Special Judge under the Criminal Law Amendment Act only for trying offences under the Prevention of Corruption Act. No doubt, he was appointed in the circumstances stated by the High Court, and therefore he will have that jurisdiction which he is competent to exercise under the Prevention of Corruption Act or the Criminal Law Amendment Act. Section 6 of the former provides that the State Government may appoint a Special Judge to try the following offences: (a) an offence punishable under section 161, section 165 or section 165A of the Indian Penal Code (Act XLV of 1860) or sub section (2) of section 5 of the Prevention of Corruption Act, 1947 (11 of 1947); (b) any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in clause (a). Sub section (1) of section 7 provides that notwithstanding any. thing contained in the Code of Criminal Procedure, 1898 or in any other law the offences specified in sub section (1) of section 6 shall be triable by special judges only. Sub section (3) of section 7 provides that when trying any case, a special judge may also try any offences other than an offence specified in section 6 with which the accused may under the Code of Criminal Procedure, 1898 be charged at the same trial. 204 Clearly, therefore, accused No. 1 could be tried by the Special Judge for offences under 'section ' 120 B read With sections 466, 467 and 420 I.P.C. Similarly the other accused who are, said to have abetted these offences could also be tried by the Special Judge. The view of the High Court is thus erroneous and its directions with respect to these offences are set aside. The High Court has further held that the provisions of a 196A(2) of the Code of Criminal Procedure have not been complied with and therefore the charges in respect of offences under as. 466 and 467 could not be enquired into by the Special Judge; section 196A(2) of the Code of Criminal Procedure reads thus: "No Court shall take cognizance of the offence of criminal conspiracy punishable under section 120B of the Indian Penal Code, (2) in a case where the object of the conspiracy is to commit any non cognizable offence, or a cognizable offence not punishable with death, imprisonment for life or rigorous imprisonment for a term of two years, or upwards, unless the State Govern ment, or a Chief Presidency Magistrate or District Magistrate empowered in this behalf by the State Government, has, by order in writing, consented to the initiation of the proceedings: Offences under sections 466 and 467 are admittedly non cognizable and, therefore, it would seem from the plain language of sub section (2) that for the offences under section 120 B read with sections 466 and 467, I.P.C. the sanction of the Government will be necessary. Mr. Umrigar referred us to the decision in Durgadas Tulsiram Sood vs State (1) and said that since the object of the conspiracy was to cheat the Government, that is, to commit an offence under section 420 I.P.C. and the offences under as. 466 and 467 were only means to that end, the trial was not vitiated simply because no sanction was obtained for prosecuting the accused for offences of criminal conspiracy to commit non cognizable offences; under as. 466 and 467 I.P.C. We do not think it necessary to say anything on the point because in (1) I.L.R. 205 any case the case has to go back to the Special Judge for re framing the charges and there is time enough for the Government to consider whether it should accord sanction to the prosecution of the various accused for the non cognizable offences alleged to have been committed by them in pursuance of conspiracy, assuming of course, that sanction is necessary. In the result we allow the appeal and set.aside the order of the High Court and direct the Special Judge to, frame fresh charges and proceed with the trial. The matter has been pending for a long time and we direct that the trial will proceed with. all expedition. Appeal allowed. Retrial ordered.

The High Court quashed the charges framed against the respondents. The charge sheet stated that accused 1 to 9 had committed offenses under section 12oB of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act, 1947, and that accused No. had committed offenses under SS. 5(1)(c) and 5, (i)(d) of the Prevention of Corruption Act and SS. 463, 464 Of the Indian Penal Code and accused 2 to 8 abetted all the offenses and each of the accused in addition had committed offenses under section 420 Of the Indian Penal Code. The High Court directed the Special judge to frame fresh charges inter alia on the ground that charge No. 1 was an omnibus charge containing as many as 203 offenses and that it was direct violation of SS. 234, 235 and 239 Of the Code of Criminal Procedure. Further that the Special judge had no jurisdiction to try the offenses under section 120B read with SS. 466, 467 and 420 Of the Indian Penal Code because he was appointed a Special judge under the Criminal Law Amendment Act, only for trying offenses under Prevention of Corruption Act. The question was whether all the accused, persons could be jointly tried in respect of all these offenses. Held, that when several persons had committed offenses, in the course of the same transaction, they could jointly be tried in respect of all those offenses under section 239 Of the Code of Criminal Procedure and the limitation placed by section 234 Of the Code could not come into operation, but the charges should be suitably split up so that the accused persons would not be prejudiced in answering the charges and defending themselves. Held, further, there is no analogy between section 120B and section Log of the Indian Penal Code. There may be an element of abetment in a conspiracy which is an offence by itself but conspiracy is something more than abetment for which a person could separately be charged. Offenses created under SS. 109 and 120B of the Indian Penal Code are quite distinct and there is no warrant for limiting the prosecution to only one element of conspiracy, that is, abetment when the allegation is that what a person did was something over and above that. If the alleged offenses flow out of the conspiracy the appropriate form of charge would be a specific charge in respect of each of those offenses along with the charge of conspiracy. Held, further, that the introduction of a large number of charges spread over a long period was a question of propriety and it should be left to the judge or the Magistrate trying the case to adopt the course which he thought to be appropriate in the facts and circumstances of the case. Held, also, that while a special judge appointed under section 6 of the Criminal Law Amendment Act has jurisdiction to try cases under section 5 of the Prevention of Corruption Act he can under section 7(3) Of the Criminal Law Amendment Act try other offenses under the Criminal Procedure Code for which the accused can be charged at the same trial. 196 In re Venkataramaiah, A.I.R. 1938 Mad. 130, disapproved. section Swaminatham vs State of Madras, A.I.R. 1957 S.C. 340, R. vs Dawson, [1960] 1 All E.R. 558 and Durgadas Tulsiram Sood vs State, I.L.R. , referred to.

Civil Appeal No. 1983 of 1970 From Judgment and Decree dated 29 7 69 of the Punjab & Haryana High Court in F.A.O. No. 35/66. 568 Naunit Lal, K. Vasdev and Ms. V. Grover for the appellant. V.M. Phadke and Harbans Singh for the respondent. The Judgment of the court was delivered by MISRA, J. The present appeal by special leave is directed against the judgment and order dated 29th July, 1969 of the High Court of Punjab and Haryana at Chandigarh. The dispute in this appeal centres around a religious institution in village Ramgarh (also known a Bhagtuana), tehsil Faridkot, district Bhatinda. This village was previously in the erstwhile Nabha State which merged with Pepsu and after the reorganisation of the States, became a part of the Punjab State in 1956. Sixty five persons claiming to be members of the Sikh community moved an application before the State Government under section 7 (1) of the Sikh Gurdwara Act, 1925 (hereinafter referred to as the Act), as amended by the Amendment Act I of 1959, to have the institution declared to be a Sikh Gurdwara. The State Government notified the said application in the Punjab Gazette in terms of section 7 (3) of the Act on 18th October, 1963. Upon this the appellant made an application under sections 8 and 10 of the Act claiming that the institution was not a Sikh Gurdwara but an Udasi institution known as Dera Bhai hagtu. This application was referred by the State Government to the Sikh Gurdwara Tribunal for adjudication. It was contended by the appellant that throughout its long history the institution has been an Udasi institution. This institution was not established for use by Sikhs for public worship. nor was it founded in the memory of a Sikh Martyr, saint or a historical person. It has never been used for public worship by the Sikhs. The institution was the Dera of Udasi Bhekh and the objects of worship are idols of Gola Sahib and of Baba Srichand, and the various samadhs. The petition was resisted by the respondent Shiromani Gurdwara Prabandhak Committee on three grounds: (1) that the appellant was not competent to move the petition under s.7 of the Act because he was not a hereditary office holder, (2) that the provisions of the Act are not ultra vires the Constitution, and (3) that the institution in dispute was a Sikh Gurdwara. On the pleadings of the parties the Tribunal framed three issues: whether the provisions of the Act are ultra vires the Constitution, 569 (2) whether the appellant was a hereditary office holder, and (3) whether the institution in dispute was a Sikh Guradwara. Issue No. 1 was not pressed and, therefore, the Tribunal in conformity with the previous decisions held the provisions of the Act to be intra vires the Constitution. On the second issue the Tribunal recorded a finding in favour of the appellant. On the third issue, the Tribunal held that the disputed institution was a Sikh Gurdwara. The appellant feeling aggrieved by the judgment of the Tribunal took up the matter in appeal to the High Court and the High Court in its turn confirmed the findings of the Tribunal and dismissed the appeal by the impugned judgment. The appellant has now come to his Court on obtaining special leave and the only issue that survives for consideration by this Court is issue No.3, that is, whether the institution in dispute is a Sikh Gurdwara. Before dealing with the points urged by the counsel for the parties it would be appropriate at this stage to know the distinctive features of Sikhism and Sikh temples. Although for the purpose of historical research and analysis on such subject, the forum of a court of law is not ideal yet if the statute enjoins the Court to decide such questions, the Court has got to discharge the responsibility. Section 16 (1) of the Act provides: "16 (1). Notwithstanding anything contained in any other law in force if in any proceeding before a tribunal it is disputed that a gurdwara should or should not be declared to be a Sikh Gurdwara, the tribunal shall, before enquiring into any other matter in dispute relating to the said gurdwara, decide whether it should or should not be declared a Sikh Gurdwara in accordance with the provisions of sub section (2). " One of the most fascinating aspects of Sikhism is the process which began with human Gurus, continued during the period of duality in which there were human Gurus and a collection of sacred writings and ended with the present situation in which full authority is enjoined by the scripture. In every respect the scripture is what the Gurus were. Both the Gurus and the Book deserve respect, which they are accorded because of the Bani which they express, the word of divine truth. Therefore, it was possible for Guru Arjan, the fifth in the human line, to bow before the collection which he had compiled and installed 570 in the newly built Darbar Sahib in 1604 for he was acknowledged the higher authority of the Banidue to the personal importance and significance which he possessed as Guru. The Sikh Gurus have much in common with other preceptors in Indian tradition but their history and contribution is distinctive. They were not Brahmins, they did not see their calling to be that of expounding Vedas, they taught in vernacular not Sanskrit and their message was for everyone. They were ten in number each remaining faithful to the teachings of Guru Nanak, the first Guru and when their line was ended by a conscious decision of Guru Gobind Singh, the last Guru, succession was invested in a collection of teachings which was given the title of Guru Granth Sahib. This is now the Guru of the Sikhs. An important characteristic of the teachings of the Sikh Gurus is their emphasis upon the message, the Bani. It is this stress which made possible the transfer of Guruship to the scripture. The human Gurus were the instruments through whom the voice of God became audible. The holiest book of the Sikhs is Guru Granth Sahib compiled by the Fifth Master, Guru Arjan. It is the Bible of Sikhs. After giving his followers a central place of worship, Hari mandir, he wanted to give them a holy book. So he collected the hymns of the first four Gurus and to these he added his own. Now this Sri Guru Granth Sahib is a living Guru of the Sikhs. Guru means the guide. Guru Granth Sahib gives light and shows the path to the suffering humanity. Wherever a believer in Sikhism is in trouble or is depressed he reads hymns from the Granth. When Guru Gobind Singh felt that his worldly sojourn was near, he made the fact known to his disciples. The disciples asked him as to who would be their Guru in future. The Guru immediately placed five pies and a coconut before the holy Granth, bowed his head before it and said "The Eternal Father willed, and I raised the Panth. All my Sikhs are ordained to believe the Granth as their preceptor. Have faith in the holy Granth as your Master and consider it. The visible manifestation of the Gurus. He who hath a pure heart will seek guidance from its holy words". 571 The Guru repeated these words and told the disciples not to grieve at his departure. It was true that they would not see his body in its physical manifestation but he would be ever present among the Khalsas. Whenever the Sikhs needed guidance or counsel, they should assemble before the Granth in all sincerity and decide their future line of action in the light of teachings of the Master, as embodied in the Granth. The noble ideas embodied in the Granth would live for ever and show people the path to bills and happiness. Temples are found almost in every religion but there are some difference between the Sikh temples and those of other religions. The sikh Gurdwaras have the following distinctive features: 1. Sikh temples are not the place of idol worship as the Hindu temples are. There is no place for idol worship in a Gurdwara. The central object of worship in a Gurdwara is Sri Guru Granth Sahib, the holy book. The pattern of worship consists of two main items: reading of the holy hymns followed by their explanation by some learned man, not necessarily a particular Granthi and then singing of some passages from the Holy Granth. The former is called Katha and the second is called Kirtan. A Sikh thus worships the Holy Words that are written in the Granth Sahib, the Words or Shabada about the Eternal Truth or God. No idol or painting of any Guru can be worshipped. 2 Sikh worship in the Gurdwara is a congregational worship, whereas Hindu temples are meant for individual worship. A Sikh does the individual worship at home when he recites Gurbani daily. Some scriptures meant for this purpose are Japji, Jaap, Rehras, Kirtan Sohila. Sangat is the collective body of Sikhs who meet every day in the Gurdwara. Gurdwara is a place where a copy of Guru Granth Sahib is installed. The unique and distinguishing feature would always be the Nishan Sahib, a flagstaff with a yellow flag of Sikhism flying from it. This serves as a symbol of the Sikh presence. It enables the travellers, whether they be Sikhs or not to know where hospitality is available. There may be complexity of rooms in a Gurdwara for the building may also serve as a school; or where children are taught the rudiments of Sikhism as well as a rest centre for travellers. Often there will. be a kitchen where food can be prepared though langar itself might take place in the yawning. Sometimes the Gurdwara will also be used as a clinic. But its Pivotal point is the place of worship and the main room 572 will be that in which the Guru Granth Sahib is installed where the community gathers for diwan. The focal point in this room will be the book itself. From the foregoing discussion it is evident that the sine qua non for an institution being a Sikh Gurdwara is that there should be established Guru Granth Sahib and the worship of the same by the congregation, and a Nishan Sahib as indicated in the earlier part of the judgment. There may be other rooms of the institution meant for other purposes but the crucial test is the existence of Guru Granth Sahib and the worship thereof by the congregation and Nishan Sahib. It is not necessary that there must be a granthi in a Gurdwara. Any learned person can read Guru Granth Sahib and explain to the congregation. With this preliminary about the distinctive features of a Sikh temple we proceed to deal with the contentions of the counsel for the parties. Shri Naunit Lal, counsel for the appellant contended that the High Court has misread the evidence and that has vitiated its finding. He referred to the material portions of the judgment and the evidence of the parties to support his contention. on perusal of the judgment and the relevant evidence we do not find any misreading of evidence by the High Court. This contention, therefore, has no force. We, however, find that the High Court proceeded on the assumption that admittedly Bhai Bhagtu was a Sikh saint and that the disputed institution was established in his memory. This would be evident from the following observation made by he High Court. "On an overall consideration of this aspect we are inclined to accept the contention of Mr. Shant that admittedly Bhai Bagtu was a Sikh saint and this institution was established in his memory and as such the case of the respondent would also come within the ambit of section 16(2) (iv) of the Sikh Gurudwara Act". But this observation is not warranted from the pleadings or the evidence of the parties. Pritam Dass, the appellant, as P.W.S. in his deposition has categorically stated: "Bhai Bhagtu was an Udasi Fahir". In the pleadings also the appellant set up that Bhai Bhagtu was an Udasi saint and the institution was a Dera of the Udasi sect, 573 while the respondent, on the other hand, in its reply stated that Bhai Bhagtu was a Sikh saint and the institution was established in the memory of that Sikh saint. In this state of pleadings and the evidence adduced by the parties it will not be correct to say that admittedly Bhai Bhagtu was a Sikhsaint and that this institution was established in his memory. Rather this was the only disputed question to be decided by the Court. Thus while holding that there is no misreading of evidence we find that there is misreading of the pleadings of the parties. It was next contended for the appellant that the appellant of udasi set being incharge of the institution in question, the succession to the institution being from Guru to Chela, the institution being recorded as Dera of Udasi sect in some of the revenue records, the existence and worship of various idols and samadhs within the precincts of the institution and the absence of a granthi in the institution are all in compatible with the institution being a Sikh Gurdwara. Shri M. N. Phadke appearing for the respondent on the other hand has contended that (1) the points which were never urged in the courts below could not be allowed to be raised for the first time in this Court; (2) in any case the existence of samadhs and idols within the precincts of the institution and the worship thereof, and the absence of a granthi and the succession to the institution from guru to chela are not destructive of the institution being a Sikh Gurdwara; (3) the finding of the High Court that the institution in question is a Sikh Gurdwara is fully warranted by the evidence on record, and (4) the nature of the institution has to be decided in the light of sub section (2) of section 16 of the Sikh Gurdwara Act. The Court has been called upon to decide whether the institution in question is a Sikh Gurdwara. While considering this question the Court has to take into consideration all the circumstances which favour or militate against the institution being a Sikh Gurdwara. In the very nature of things and in view of the requirements of sub section (2) of section 16 it becomes necessary to consider whether the institution being in charge of an Uadasi saint, the existence of samadhs of Udasi saints and worship thereof, or the existence of the idols and absence of a granthi and succession to the institution from guru to chela are all relevant considerations and the Court has to consider them if there is evidence on the record. In the instant case evidence has been adduced on behalf of the appellant about the existence of samadhs and the various idols, the absence of a granthi and succession to the institution 574 from guru to chela. We see no reason why the appellant be prevented from urging the aforesaid circumstances. On the question whether the existence of samadhs and of the idols and the absence of a granthi or succession to the institution from guru to chela militates against the institution being a Sikh Gurdwara the counsel for the parties have adduced evidence in support of their respective contentions. The counsel for the parties have also cited cases in support of their respective contentions. The counsel for the appellant relied on Hem Singh & Ors. vs Basant Das & Anr(1). In that case the question for consideration was whether Udasis are Sikhs. The court held that Udasis are not Sikhs for the purposes of Sikh Gurdwara Act. Although Guru Nanak founded Sikhism as a new religion by sweeping away idolatry and polytheism, Sri Chand, the son of Guru Nanak, the founder of the Udasis, was himself not a Sikh but a Hindu. No reconciliation between the Sikhs and the Udasis ever took place. The Udasis are in consequence not Sikhs, but schismatics who separated in the earliest days of Sikhism and never merged with the followers of the Gurus. Reliance was next placed upon Bawa Ishar Dass & ors. vs Dr. Mohan Singh & ors (2) The Court held: ". it has been established that the Mahants have all along been Udasis, that the institution was an Udasi monastery, that the Guru Granth Sahib was read there by the Udasi Mahant and that Sikhs may have attended these readings but that all other ceremonies, observed by Udasis and Hindus, were performed at the institution. It cannot be held from the mere fact that the Udasis also read the Guru Granth Sahib a book which they do venerate, that the Sikhs should be associated in the management of this genuine Udasis institution. It was held by a Division Bench of this Court in that the Udasi order constitutes a separate sect, distinct from the orthodox Sikhs and that though they have retained many Hindu beliefs and practices, yet in the wider sense of the term they may also be Sikhs. They occupy an intermediate position between strictly orthodox Sikhs and Hindus. The Udasis are in fact a monastic 575 Order in their origin and are followers of Bawa Siri Chand, son of the first Guru though they worship smadhs, etc. they do reverence the Granth Sahib without completely renouncing Hinduism. They are often in charge of the village Dharamsala or Gurdwara, which is a Sikh institution but in other cases the Sadh and his chelas constitute a monastery or college. Owing to their intermediate positions, it is possible for Udasis to be in charge of a Sikh Gurudwara properly so called, but it does not follow that that institution is a sikh Gurudwara and not a true Udasi institution merely because the Granth Sahib is read". In Harnam Singh vs Gurdial Singh on an analysis of various decisions this Court held: "These decisions clearly indicate the principle that though the Sikh Guru Granth Sahib is read in the shrines managed by the by the members of the Udasi Sect, that was not enough to hold that those shrines were Sikh Gurdwaras. In the case before us, the more fact that at some stage there was a Guru Granth Sahib in this Dera cannot thus lead to any conclusion that this institutions was meant for, or belonged to, the followers of the Sikh religion. Clearly, the Dera was maintained for an entirely distinct sect known as the Nirmala Sadhs who cannot be regarded as Sikhs and consequently, in their mere capacity of followers of Sikhs religion residing in village Jhandawala, the plaintiffs/respondents could not be held to have such an interest as could entitled hem to institute the suit under section 92 of the Code of Civil Procedure." Shri Phadke appearing, for the respondent on the other hand his cited Mahant Dharam Das etc. vs State of Punjab & Ors (2). Dealing with the tenets of the Sikhs this Court observed: "The Sikhs believe in the ten Gurus the last of whom was Guru Gobind Singh. They further believe that there is no other Guru after Guru Gobind Singh who enjoined on his followers that after him they should Consider Guru Granth Sahib as the Guru. They do not subscribe to idol worship and polytheism, nor do they have any Samadhi in their shrines. The teaching of Sikhs was against asceticism. They believe in Guru Granth Sahib, which is a Rosary of sacred poems, exhortations, etc. 576 During the time of the Sikh Gurus the Gurdwaras were under their direct supervision and control or under their Masends or missionary agents. After the death of Guru Gobind Singh the Panth is recognised as the corporate representative of the Guru on earth and thereafter they were managed by the Panth through their Granthis and other sewadars who were under direct supervision of the local Sangat or congregation The position of the Gurdwaras changed during British regime. The mahants who were in charge of the Sikh Gurdwaras could either be a Sikh Mahant or Udasi Mahant. Though there was no reconciliation between the Sikhs and Udasis, it did not matter if the Mahant of a Sikh Gurdwara was not a Sikh Mahant because the Panth or Sangat exercised control over the Gurdwaras". Next reliance was placed o Sohan Das vs Bela Singh & Ors.(2) Dealing with section 16(2) of the Sikh Gurudwara Act the Court observed: "The documentary evidence therefore establishes that the dharamsala has been a place of public worship since 1853, and that such worship has been connected with the Granth Sahib I am prepared to accept the evidence of the objectors that the existence of a samadh dates only from recent times, more than probably after the Sikh Gurdwara controversy had become acute and he importance of a samadh had been realized by the Udasi Mahants. I hold therefore that the evidence supports the conclusion of the majority of the Tribunal that this institution falls within s.16 (2) (iii) of the Act". In view of the divergent cases cited by the counsel for the parties we have to take into consideration the distinctive features of a Sikh Gurdwara as discussed in the earlier part of the judgment. So viewed, the existence an worship of Guru Granth Sahib and the existence of Nishan Sahib are the determinative factor. The Tribunal did not take into consideration the oral evidence adduced by the parties. Eight witnesses were produced on behalf of the appellant while six witnesses were produced on behalf of the respondent. The High Court also did not give a proper deal to the oral evidence adduced by the appellant. The only consideration given by the High Court to the oral testimony of the witnesses on behalf, of the appellant was in the following terms: 577 "As regards the oral testimony on the point that the institution was a Dera of an Udasi Sadhu, the same is obviously interested, and hardly credible. The Tribunal has not attached any weight to the same and we are wholly in agreement with the finding of the Tribunal on that point. " The witnesses on either side have come to depose on oath. The grounds on which the evidence adduced on behalf of the appellant has been discarded may equally apply to the evidence adduced on behalf of the respondent. The Court should have considered the worth of the evidence of each witness and should have given reasons for disbelieving the same on merit. A bald observation that the witnesses produced on behalf of the appellate are interested must be deprecated. Even otherwise the courts below have not approached the case from the correct angle. (The Courts had to decide the question in view of the provisions of sub section (2) of section 16 of the Act and they had to record a positive finding in the light of sub s.(2) of section 16,) which reads: "16 (2) If the tribunal finds that the gurdwara (i) was established by, or in memory of any of the Ten Sikh Gurus, or in commemoration of any incident in the life of any of the Ten Sikh Gurus and was used for public worship by Sikhs, before and at the time of the presentation of the of the petition under sub section (1) of section 7; or (ii) owing to some tradition connected with one of the Ten Sikh Gurus, was used for public worship predominantly by Sikhs, before and at the time of the presentation of the petition under sub section (I) of section 7; or (iii) was established for use by Sikhs for the purpose of public worship and was used for such worship by Sikhs, before and at the time of the presentation of the petition under Sub section (I) of section 7; or (iv) was established in memory of a Sikh martyr, saint or historical person and was used for public worship by Sikhs, before and at the time of the presentation of the petition under sub section (I) of section 7; or 578 (v) owing to some incident connected with the Sikh religion was used for public worship predominantly by Sikhs, before and at the time of the presentation of the petition under sub section (I) of section 7; the tribunal shall decide that it should be declared to be a Sikh Gurdwara, and record an order accordingly". Unless the claim falls within one or the other of the categories enumerated in sub section (2) of section 16, the institution cannot be declared to be a Sikh Gurdwara. The Court had, therefore, first to consider as pleaded by the parties, as to whether Bhai Bhagtu was a Udasi saint or a Sikh saint, and then to decide on the basis of evidence whether the institution in question is one or the of the types indicated. This was the only question for consideration before the High Court but unfortunately it assumed what was to be proved. On the foregoing discussion we are satisfied that the High Court has not given a proper deal to the matter and has not considered the oral evidence adduced on behalf of the parties. Nor has it approached case from the correct perspective of law. Ordinarily, in a situation as here the matter should have gone back to the High Court for recordings findings on the basis of appreciation of evidence but we are not inclined to remand the matter as it is a very old dispute. We are, therefore , prepared to take that burden ourselves and finally decide the dispute. As would appear, parties were aware of the nature claim and the evidence to be led and, therefore, parties concentrated their attention on the aspects which would be, decisive of the points in dispute. It is unfortunate that the Tribunal and the High Court did not Keep the proper perspective in view whiles dealing with the matter. On behalf of the appellant Ram Saran Dass, P W 1, Charan Dass, PW 2, Bishan Dass, PW 3, Jagraj Singh, PW 4, Chajju Ram, PW 5, Zora Singh Patwari, PW 6, Surjit Singh, PW 7 and the appellant, PW 8, were examined. On behalf of the respondent, Hardev Singh, RW 1, Bachan Singh, RW 2, Balbir Singh, RW 3, Balwant Singh, RW 4, Hazura Singh, RW 5, and Gurdial Singh, RW 6, were examined as witness. 579 The finding of the High Court as extracted hereinbefore clearly show that the four important and most relevant aspects of the case as disclosed in the evidence were completely overlooked or side tracked by the High Court, They are: (i) there are Samadhs on the premises of the institution ;(ii) there are idols and photos of Hindu deities; (iii) Bhai Bhagtu was a Udasi Saint; and (iv) succession was from Guru so Chela. The petition filed by the appellant under s.8 of the Act contained a clear averment that the institution had been set up by Bhai Bhagtu who was a Udasi Saint and the presence of three Samadhs of (I) Bhai Bhagtu, (2) Baba Paras Ram Ji and (3) Mahant Sahib Dass Ji, was also asserted. In the written statement the respondent, after a vague denial, had admitted the institution to have been founded by Bhai Bhagtu. PW 1, Ram Saran Dass stated that there was an idol of Baba Srichand in the institution and there were pictures of Lord Krishna and other Hindu deities. This statement was elicited in cross examination made by the respondent. PW 2 has stated that there is an idol of Baba Srichand and Gola Sahib in the institution and they are objects of worship. PW 3, Bishan Dass, referred to the idol of Baba Shrichand. PW 4, Jagral stated that there were three or four samadhs on the premises of the institution and those are objects of worship There was no challenge to this statement in examination in chief by cross examination. PW 5 was asked in cross examination whether there were Samadhs on the premises of the institution and his answer is revealing. He stated that there are three Samadhs on the premises of the institution and there is a dome over the Samadhs of Bhai Bhagtu. He added that there are other pictures of Hindu deities and Hindu Festivals are celebrated in the institution. PW 7, Surjit Singh, the local Sarpanch stated that the institution was of Udasi Fakirs. He also stated that there is a Samadh of Bhai Bhagtu on the premises of the institution and it is an object of worship. He indicated that the Samadh of Bhai Bhagtu was worshipped in a grand scale while the other two Samadhs were not treated on equal basis. There was no cross examination of this witness on this aspect. Pritam Dass, the appellant did support his case. Ordinarily his evidence would have been treated as interested as he happens to be the party but his assertions have well corroborated. Coming to the respondent 's side, the first witness Hardev Singh in his examination in chief stated that there is a Samadh of Bhai Bhagtu in the institution and another Samadh of his mother. On the basis of this admission of the principal witness of the respondent there can be 580 on doubt that Samadhs exist within the institution. At the hearing counsel had pointed out that this witness was a member of the Communist Party. We do not think that would at all be a proper way of appreciating the evidence of the witnesses. He was a witness called by the respondent and was not declared hostile, if he made admissions in his examination in chief. On the other hand, the fact that he does not belong to the groups of either party and is a Communist would lend credence to his evidence as coming from an impartial source. The next witness, RW 2, Bachan Singh admitted the existence of the Samadhs but denied that the Samadh of Bhai Bhagtu was an object of worship. RW 3, Balbir Singh, admitted the presence of Samadh of Bhai Bhagtu as also of his mother. It is in the evidence of this witness that he also belongs to the Communist Party. What we have said about RW 1 equally applies to this witness. RW 4, Balwat Singh admitted the presence of Bhai Bhagtu 's Samadh; while RW 5, Hazura Singh stated that there were two Samadhs on the premises one of Bhai Bhagtu and the other of his mother. The last witness, RW 6, Gurdial Singh in his evidence admitted the existence of the two, Samadhs of Bhai Bhagtu and his mother. This analysis of the evidence clearly indicates that it has been unquestionably established without the slightest shadow of a doubt that there are at least two Samadhs on the premises of the institution one being of Bhai Bhagtu and the other of his mother. The existence of the idol of Baba Srichand, the founder of the Udasi sect in the premises also seems to have been fully established. As already stated, Sikhs would not permit the idol of Baba Srichand in a Gurdwara, while Udasis would ordinarily install such an idol to perpetuate the memory of the founder of their sect. What emerges from this discussion is that as found by the Tribunal, the succession was from Guru to Chela; that Bhai Bhagtu was a Udasi Saint and there are Samadhs on the premises one of Bhai Bhagtu and the other of his mother. Evidence shows that there are photos of Hindu deities in the institution. These three facts, without anything more, would be sufficient to reject the case of the respondent that the institution is a Sikh Gurdwara. We would like to reiterate that existence of Samadhs and succession from Guru to Chela would clearly be destructive of character of the institution as a Sikh Gurdwara because they are inconsistent with the tenets of the Sikh 581 religion. The issue before the High Court as also the Tribunal was whether the institution Dera Bhai Bhagtu was a Sikh Gurdwara. Reference to another aspect would be relevant here. Counsel for the respondent emphasized the feature that there was evidence to show that Guru Granth Sahib was recited and read in this institution. It is well established that Udasis are mid way between Sikhs on the one hand and Hindus on the other. Srichand, son of Guru Nanak, the founder of the Sikhism, had, as already indicated, broken away and set up the Udasi sect. Udasis while venerating Guru Granth Sahib, retained Hindu practices and also showed their veneration to the Samadhs. From the very fact that Guru Granth Sahib was recited in this institution, no support can be drawn for the claim that the institution was a Sikh Gurdwara. On the materials on record, we are of the view that the findings recorded by the Tribunal as also the High Court are wholly unsupportable to satisfy the tests indicated in law for determining the character of the institution. We allow the appeal, reverse the decision of the Tribunal as upheld by the High Court and declare that Dera Bhai Bhagtu is not Sikh Gurdwara. In the circumstances of the case there would be no order as to costs. S.R. Appeal allowed.

Sixty five persons claiming to be members of the Sikh community moved an application before the State Government under Section 7(1) of the Sikh Gurudwara Act, 1925 to have a religious institution in village Ramgarh (also known as Bhagtuana of Faridkot tehsil, declared to be a Sikh Gurudwara. The State Government notified the said application in the Punjab Government Gazette in terms of Section 7(3) of the Act on 18th October, 1963. Upon this the appellant made an application under Section 8 and 10 of the Act claiming that the institution was not a Sikh Gurudwara but an Udasi institution known as Dera Bhai Bhagtu. The application was referred to the Sikh Gurudwara Tribunal for adjudication. The petition was resisted by the respondent Shiromani Gurudwara Prabandhak Committee on three grounds: (i) that the appellant was not competent to move the petition under section 7 of the Act as he was not a hereditary office holder, (ii) that the provisions of the Act are not ultravires the Constitution; and (iii) that the institution in dispute was a Sikh Gurudwara. The Tribunal held against the respondent and in favour of the appellant on contention(1). Since the second contention was not pressed and the third question was the only issue, the Tribunal held that the institution was a Sikh Gurudwara. In appeal, the Punjab and Haryana High Court confirmed the Tribunal 's findings. Hence the appeal by Special Leave of the Court. Allowing the appeal, the Court ^ HELD: 1.1. The religious institution, Dera Bhai Bhagtu is not Sikh Gurudwara. On the materials on record, the findings recorded by the Tribunal as well as the High Court are wholly unsupportable to satisfy the tests indicated in law for determining the character of the institution. [581D] 1.2. The findings of the High Court clearly show that the four important and most relevant aspects of the case as disclosed in the evidence were completely overlooked or side tracked by the High Court. They are: (i) there are Samadhs on the premises of the institution; (ii) there are idols and photos of Hindu deities; (iii) Bhai Bhagtu was a Udasi Saint; and (iv) succession was from Guru to Chela. 565 The petition filed by the appellant under s.8 of the Act contained a clear averment that the institution had been set up by Bhai Bhagtu who was a Udasi Saint and the presence of three Samadhs of (1) Bhai Bhagtu, (2) Baba Paras Ram Ji, and (3) Mahant Sahib Dass Ji, was also asserted. In the written statement the respondent, after a vague denial, had admitted the institution to have been founded by Bhai Bhagtu. Pritam Dass, the appellant did support his case. Ordinarily his evidence would have been treated as interested as he happens to be the party but his assertions have been well corroborated. The same is strengthened by the evidence of all respondent 's witnesses. The evidence of witnesses clearly indicates: (i) that there are atleast two samadhs in the premises of the institution one being of Bhai Bhagtu and the other of his mother; (ii) the existence of the idol of Baba Srichand, the founder of the Udasi Sect in the premises. Clearly the Sikhs would not permit the idol of Baba Srichand in a Gurudwara while Udasis would ordinarily install such an idol to perpetuate the memory of the founder of their sect; (iii) the succession was from Guru to Chela; and (iv) there are photos of Hindu deities in the institution. These facts without anything more would be sufficient to reject the case of the respondent that the institution is a Sikh Gurudwara. [579A C; G; 580G H] 1.4. From the very fact that Guru Granth Sahib was recited in the institution no support can be drawn for the claim that the institution was a Sikh Gurudwara. It is well established that Udasis are midway between Sikhs on the one hand and the Hindus on the other. Srichand son of Guru Nanak, the founder of Sikhism, had broken away and set up the Udasi sect. [581B C] 2.1. Although for the purpose of historical research and analysis on the subject like Sikhs and Sikh temples, the forum of a court of law is not ideal, yet, if the statute enjoins the court to decide such questions, the court has got to discharge the responsibility. [569D] 2.2. The court has been called upon to decide whether the institution in question is a Sikh Gurudwara. While considering this question the Court has to take into consideration all the circumstances which favour or militate against the institution being a Sikh Gurudwara. In the very nature of things and in view of the requirements of sub s.(2) of section 16 it becomes necessary to consider whether the institution being in charge of a Udasi saint, the existence of samadhs of Udasi saints and worship thereof, or the existence of the idols and absence of a granthi and succession to the institution from guru to chela are all relevant considerations and the Court has to consider them if there is evidence on the record. In the instant case evidence has been adduced on behalf of the appellant about the existence of samadhs and the various idols, the absence of a granthi and succession to the institution from guru to chela. The appellant cannot, therefore, be prevented from urging the aforesaid circumstances. [573F H; 574A] 2.3. Courts cannot discard the evidence of witnesses of one side by simply saying that the oral testimony is interested and hardly any credible, when witnesses on either side have come to depose on oath. Here, the grounds on which the evidence adduced on behalf of the appellant has been discarded may equally apply to the evidence adduced on behalf of the respondent. The Court should have considered the worth of the evidence of each witness and should have given reasons for disbelieving the same on merit. A bald observation that the witnesses produced on behalf for the appellant are interested must be deprecated. The courts had to decide the 566 question in view of the provisions of sub s.(2) of s.16 of the Act and they had to record a positive finding in the light of sub s.(2) of s.16. Unless the claim falls within one or the other of the categories enumerated in sub section(2) of s.16, the institution cannot be declared to be a Sikh Gurudwara [577B D; 578C] 3.1. One of the most fascinating aspects of Sikhism is the process which began with human Gurus, continued during the period of duality in which there were human Gurus and a collection of sacred writings and ended with the present situation in which full authority is enjoined by the scripture. In every respect the scripture is what the Gurus were. [569G] Both the Gurus and the Book deserve respect, which they are accorded because of the Bani which they express, the word of divine truth. Therefore, it was possible for Guru Arjan, the fifth in the human line, to bow before the collection which he had complied and installed in the newly built Darbar Sahib in 1604 for he was acknowledged the higher authority of the Bani due to the personal importance and significance which he possessed as Guru. [569H; 570A] The Sikh Gurus have much in common with other preceptors in Indian tradition but their history and contribution is distinctive. They were not Brahmins, they did not see their calling to be that of expounding Vedas, they taught in vernacular not Sanskrit and their message was for everyone. They were ten in number each remaining faithful to the teachings of Guru Nanak, the first Guru and when their line was ended by a conscious decision of Guru Gobind Singh, the last Guru, succession was invested in a collection of teachings which was given the title of Guru Granth Sahib. This is now the Guru of the Sikhs. [570B C] An important characteristic of the teachings of the Sikh Gurus is their emphasis upon the message, the Bani. It is this stress which made possible the transfer of Guruship to the scripture. The human Gurus were the instruments through whom the voice of the God became audible. [570D] The holiest book of the Sikhs is Guru Granth Sahib complied by the Fifth Master, Guru Arjun. It is the Bible of Sikhs After giving his followers a central place of worship, Hari Mandir, he wanted to give them a holy book. So he collected the hymns of the first four Gurus and to these he added his own. Now this Sri Guru Granth Sahib is a living Guru of the Sikhs. Guru means the guide. Guru Granth Sahib gives light and shows the path to the suffering humanity. Wherever a believer in Sikhism is in trouble or is depressed he reads hymns from the Granth. Whenever the Sikhs needed guidance or counsel, they should assemble before the Granth in all sincerity and decide their further line of action in the light of teachings of the Master, as embodied in the Granth. The noble ideas embodied in the Granth would live for ever and show people the path to blisss and happiness. [570E F; 571B] 3.2. Temples are found almost in every religion but there are some differences between the Sikh temples and those of other religions. The Sikh Gurudwaras have the following distinctive features: [571C] 1. Sikh temples are not the place of idol worship as the Hindu temples are. There is no place for idol worship in a Gurudwara. The central object of worship 567 in a Gurudwara is Sri Guru Granth Sakib, the holy book. The pattern of worship consists of two main items: reading of the holy hymns followed by their explanation by some learned man, not necessarily a particular Granthi and then singing of some passages from the Holy Granth. The former is called Katha and the second is called Kirtan. A Sikh thus worships the Holy Words that are written in the Granth Sahib, the words or Shabada about the Eternal Truth or God. No idol or painting of any Guru can be worshipped. [571C D] 2. Sikh worship in the Gurudwara is a congregational worship, whereas Hindu temples are meant for individual worship. A Sikh does the individual worship at home when he recites Gurbani daily. Some scriptures meant for this purpose are Japji, Jaap, Rehras, Kirtan Sohila. Sangat is the collective body of Sikhs who meet every day in the Gurudwara. [571E F] 3. Gurudwara is a place where a copy of Guru Granth Sahib is installed. The unique and distinguishing feature would always be the Nishan Sahib, a flagstaff with a yellow flag of Sikhism flying from it. This serves as a symbol of the Sikh presence. It enables the travellers, whether they be Sikhs or not, to know where hospitality is available. There may be complexity of rooms in a Gurudwara for the building may also serve as a school, or where children are taught the rudiments of Sikhism as well as a rest centre for travellers. Often there will be a kitchen where food can be prepared though langar itself might take place in the yawning. Sometimes the Gurudwara will also be used as a clinic. But its pivotal point is the place of worship and the main room will be that in which the Guru Granth Sahib is installed where the community gathers for diwan. The focal point in this room will be the book itself. [571G H; 572A] 3.3. The sine qua non for an institution being a Sikh Gurudwara is that there should be established Guru Granth Sahib and the worship of the same by the congregation, and a Nishan Sahib as indicated in the earlier part of the Judgment. There may be other rooms of the institution meant for other purposes but the crucial test is the existence of Guru Granth Sahib and the worship thereof by the congregation and Nishan Sahib. It is not necessary that there must be a granthi in a Gurudwara. Any learned person can read Guru Granth Sahib and explain to the congregation. [572B C] Hem Singh and Others vs Basant Das & Anr. (1935 36) L.R. 631 IA 180; Bawa Ishar Dass & Others vs Dr. Mohan Singh and Others, Arjan Singh vs Inder Das ; Harnam Singh vs Gurdial Singh ; Mahant Dharam Das etc. vs State of Punjab & Ors. ; Sohan Das vs Bela Singh & Ors. AIR 1934 Lah. 180 referred to,

Appeal No. 5 of 1959. Appeal from the judgment and order dated February 16, 1954, of the former Hyderabad High Court in Reference No. 347/B 5/2 of 1953 54. C. K. Daphtary, Solicitor General of India, K. N. Rajagopala Sastri and D. Gupta, for the appellant. Sanat P. Mehta and J. B. Dadachanji, for the respondent. November 8. The Judgment of the Court was delivered by section K. DAS J. This is an appeal on a certificate of fitness granted by the High Court of Judicature at Hyderabad under s.66 A (2) of the Indian Income tax Act, 1922. The Commissioner of Income tax, Hyderabad, is the appellant before us. The respondent is Dewan Bahadur Ramgopal Mills Ltd., a public limited company incorporated in the erstwhile State of Hyderabad. The respondent company was assessed under the Hyderabad Income tax Act in respect of the assessment years 1357 F, 1358 F and 1359 F. In the assessment for those years depreciation allowance was given to it on the basis of the written down value of its assets, such as buildings, machinery, plant, etc., in accordance with the provisions of cl. (c) of section 12(5) of the Hyderabad Income tax Act. That clause provided that in the case of assets acquired before the previous year and before the commencement of the Act, the written down value would be the actual cost to the assessee less (i) depreciation at the rates applicable to the assets calculated on the actual cost for the first year since acquisition and for the next year on the actual cost diminished by the depreciation allowance for one year and so on, for each year upto the commencement of the Act, and (ii) depreciation actually allowed to the assessee on such assets for each financial year after the commencement of the 321 Act. The erstwhile State of Hyderabad merged in the Union of India on January 26, 1950, and became a Part B State. The Finance Act, 1950, by section 13 thereof repealed the taxation laws in force in Part B States except for certain purposes not relevant to this case, and by section 3 extended the Indian Income tax Act, 1922, to the whole of India except the State of Jammu and Kashmir. In exercise of the powers conferred by section 12 of the Finance Act, 1950, the Central Government was pleased to make the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950 (hereinafter referred to as the Removal of Difficulties Order, 1950), by a notification dated December 2, 1950. Paragraph 2 of the said Order, in so far as it is relevant to this case, was in these terms: " Computation of aggregate depreciation allowance and written down value: In making any assessment under the Indian Income tax Act, 1922, all depreciation actually allowed under any laws or rules of a Part B State, relating to Income tax and Super tax, or any law relating to tax on profits of business, shall be taken into account in computing the aggregate depreciation allowance referred to in sub clause (c) of the proviso to clause (vi) of sub section (2) and the written down value under clause (b) of sub section (5) of sec. 10 of the said Act". For the assessment year 1951 52 which was in respect of the account year ending June 30, 1950, the respondent was assessed for the first time under the Indian Income tax Act, 1922, read with paragraph 5 of the Part B States (Taxation Concessions) Order, 1950. Basing its claim on paragraph 2 of the Removal of Difficulties Order, 1950, the respondent asked for depreciation allowance in respect of its assets such as buildings, machinery, plant, etc., to the tune of Rs.8,12,244. It worked out the value of the assets at their inception and deducted therefrom such depreciation as was allowed for the three assessment years in which the respondent was assessed under the Hyderabad Income tax Act and calculating the written down 322 value in that manner, it claimed depreciation according to the prescribed rates. By his order dated November 30, 1951, the Income tax Officer disallowed this claim. He held that the claim of the respondent was against the principle inherent in granting depreciation allowance which must decrease from year to year, and further held that the word " allowed " in paragraph 2 of the Removal of Difficulties Order, 1950, should be construed as meaning " considered " only. Accordingly, he took the figures of the written down value from the income tax proceedings of 1359 F and allowed depreciation at the prescribed rate on those figures. Against the order of the Income tax Officer, the respondent went in appeal to the Appellate Assistant Commissioner, Hyderabad Division. That Officer by an order dated May 23, 1952, upheld the view of the Income tax Officer and dismissed the appeal. Then there was an appeal to the Income tax Appellate Tribunal which was heard by the Bombay Bench of the said Tribunal. By its order dated December 12, 1952, the Appellate Tribunal held that in view of the pro visions in paragraph 2 of the Removal of Difficulties Order, 1950, the contention of the respondent must prevail, and it pointed out that the words used in paragraph 2 were " depreciation actually allowed under any laws or rules of a Part B State ", and those words did not mean the aggregate allowance for depreciation taken into account in computing the written down value under the Hyderabad Act; therefore, the respondent was entitled to the depreciation allowance which it claimed. It directed the Income tax Officer to compute the written down value on the basis of the actual cost to the assessee of the assets in question minus the depreciation allowance actually allowed to the assessee under the Hyderabad Income tax Act. The appellant herein then moved the Appellate Tribunal for a reference to the High Court under section 66(1) of the Indian Income tax Act. In the meantime, that is, on March 9, 1953, the Central Government purporting to exercise its powers conferred by section 60 A of the Indian Income tax Act, 1922, added an Explanation 323 to paragraph 2 of the Removal of Difficulties Order, 1950. Explanation said: " Explanation : For the purpose of this paragraph, the expression " all depreciation actually allowed under any laws or rules of a Part B State " means and shall be deemed to have always meant the aggregate allowance for depreciation taken into account in computing the written down value under any laws or rules of a Part B State or carried forward under the said laws or rules ". The Explanation in terms gave effect to the contention urged on behalf of the Department and said that what has to be allowed is the aggregate allowance for depreciation taken into account in computing the written down value under any law or rules of a Part B State. In support of the application for a reference, the appellant relied on the aforesaid Explanation and contended that in view of the Explanation the respondent could not claim depreciation allowance on the basis of actual cost minus the depreciation allowances actually allowed under the Hyderabad Income tax Act. On this application the Tribunal expressed the view that if the Explanation applied to the case on hand, then the contention of the Department was correct and must be upheld. It said, however, that it had no power to review its own order and, therefore, considered it unnecessary to express any opinion whether the Explanation was valid and affected the case before it. It said finally that the following question of law did arise out of its order and accordingly stated a case thereon: " Whether in making the assessment for the year 1951 52 under the Indian Income tax Act is the assessee company entitled to claim depreciation allowance on the basis of the written down value computed at the time of the assessment for the year 1359 F, or is to be computed on the basis of the actual cost minus the depreciation allowances granted under the Hyderabad Income tax Act". The reference was then heard by the High Court of Judicature at Hyderabad which by its order dated February 16, 1954, held that the Explanation added 324 to paragraph 2 of the Removal of Difficulties Order, 1950, by the notification dated March 9, 1953, was void on certain grounds one of which was that the Explanation was ultra vires the powers of the Central Government under section 60 A of the Indian Income tax Act. Therefore, it answered the question in favour of the respondent. The appellant then obtained the necessary certificate of fitness and preferred the present appeal. In the meantime, there was a further change of law. On May 8, 1956, the Central Government made a notification (No. section R. O. 1139) in exercise of the powers conferred on it by section 12 of the Finance Act, 1950, whereby an Explanation in identical terms as the earlier Explanation made under section 60 A of the Indian Income tax Act, was added to paragraph 2 of the Removal of Difficulties Order, 1950. The arguments before us have proceeded on the basis of the Explanation added by the notification aforesaid and it is not disputed that if the Explanation is valid and applies to the present case, then the appeal must be allowed and the question of law answered in favour of the appellant. If, on the contrary, the Explanation is not valid or it does not apply to the present case, then the appeal must be dismissed. We proceed now to a consideration in detail of the different contentions urged before us on behalf of the appellant and the respondent. We may first read section 12 of the Finance Act, 1950, under which notification No. section R. O. 1139 dated May 8, 1956, was made. Section 12 reads: " If any difficulty arises in giving effect to the provisions of any of the Acts, rules or orders extended by section 3 or section 11 to any State or merged territory, the Central Government may by order, make such provision, or give such direction, as appears to it to be necessary for removing the difficulty ". On behalf of the appellant it has been argued that the notification was validly made in exercise of the powers conferred on the Central Government under section 12 aforesaid; that it does not suffer from any of the defects pointed out by the High Court in regard 325 to the earlier notification of 1953 made under section 60 A of the Income tax Act; and that it adds an Explanation which in terms gives effect to the contention of the appellant and this Court must consider the change in law made thereby and give effect to it in answering the question of law arising out of the Tribunal 's order. On the other hand, the validity of the notification has been very strenuously contested before us by learned Counsel for the respondent. He has challenged its validity and also its applicability to the present case on the following grounds : (1) that it is ultra vires the powers conferred on the Central Government by section 12; (2) that it can have no retrospective effect; and (3) that it contravenes article 14 of the Constitution. We shall consider these arguments in the order in which we have stated them. The first question is whether the notification is validly made under section 12 or is it ultra vires the powers conferred on the Central Government by that section ? On behalf of the respondent it is urged that a condition for the exercise of the power under section 12 is contained in the opening clause, which says : " If any difficulty arises in giving effect to the provisions of any of the Acts, rules or orders extended by section 3 or section II to any State etc. " The contention is that no difficulty arose in giving effect to the provisions of any of the Acts, rules or orders referred to in the opening clause, to any State etc. and, therefore, the condition for the exercise of the power is not fulfilled and on that ground the notification is invalid. We are unable to accept this argument as correct. Section 10 of the Income tax Act says, in its first subsection, that the tax shall be payable by an assessee in respect of the profits or gains of any business, profession or vocation carried on by him. Sub section (2) thereof says that such profits or gains shall be computed after making certain allowances, and one of these allowances is in respect of the depreciation of such buildings, machinery, plant, etc. as are used for the purpose of the business (cl. The depreciation except in certain cases is calculated on the written down value, which expression is explained 326 in sub section (5) of section 10. Clause (b) of the sub section states: "S.10(5) (a). . . . . . . . (b) In the case of assets acquired before the previous year the actual cost to the assessee less all depreciation actually allowed to him under this Act, or any Act repealed thereby or under executive orders issued when the Indian Income tax Act, 1886 (11 of 1886), was in force ". It is obvious that in applying cl. (b) to an assessee in a Part B State there would be an initial difficulty, in as much as prior to 1950 when the Indian Income tax Act came into force in a Part B State no depreciation could have been actually allowed to such an assessee under the Income tax Act or under any Act repealed thereby; for example, the Hyderabad Income tax Act was repealed by the Finance Act, 1950 and not by the Income tax Act, and would not therefore be covered by cl. Such and other difficulties led to the Removal of Difficulties Order, 1950, which has not been seriously challenged before us. Indeed, the High Court said that it was not open to the respondent to challenge the validity of the Removal of Difficulties Order, 1950, because such a point was not taken before the Tribunal. Learned Counsel for the respondent has then submitted that what. ever initial difficulty there might have been in giving effect to the Indian Income tax Act in a Part State, that difficulty was solved by paragraph 2 of the Removal of Difficulties Order, 1950, and, in any view, there was no fresh difficulty which could necessitate the addition of an Explanation in 1953 or 1956. Here again we think that the submission is not correct. The basic and normal scheme of depreciation under the Indian Income tax Act is that it decreases every year, being a percentage of the written down value which in the first year is the actual cost and in suc ceeding years actual cost less all depreciation actually allowed under the Income tax Act or an Act repealed thereby etc. The Hyderabad Income tax Act not having been repealed by the Income tax Act but by the Finance Act, 1950, there was a difficulty in 327 allowing depreciation to an assessee in a Part B State in the first year of assessment under the Indian Income tax Act. This difficulty was sought to be removed by paragraph 2 of the Removal of Difficulties Order, 1950. If, however, depreciation actually allowed under the Hyderabad Income tax Act was taken into account in computing the aggregate depreciation allowance and the written down value, an anomalous result would follow as in the present case, namely, depreciation allowance to be allowed to the assessee in the accounting year under the Indian Income tax Act would be more than what was allowed in previous years under the Hyderabad Income tax Act. This would create a disparity and be against the scheme of the Indian Income tax Act. It was therefore necessary to explain paragraph 2 of the Removal of Difficulties Order, 1950, to assimilate or harmonise the position regarding depreciation allowance, and the Explanation added in 1953 or 1956 was obviously intended to remove the difficulty arising out of that disparity or disharmony. Furthermore, the true scope and effect of section 12 seems to be that it is for the Central Government to determine if any difficulty of the nature indicated in the section has arisen and then to make such order, or give such direction, as appears to it to be necessary to remove the difficulty. Parliament has left the matter to the executive; but that does not make the notification of 1956 bad. In Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh & Ors. (1) we said at page 435: " Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods and the like ". We are, therefore, of the view that the notification of 1956, was validly made under section 12 and is not ultra vires the powers conferred on the Central Government by that section. The second question is does the notification apply (1) ; 328 to the assessment in the present case, which is an assessment for the year 1951 52 ? The notification was made in 1956 and it added an Explanation to paragraph 2 of the Removal of Difficulties Order, 1950. It says that a particular expression occurring in that paragraph means and shall be deemed always to have meant the aggregate allowance for depreciation taken into account in computing the written down value etc., under any law of a Part B State. The argument on behalf of the respondent is that the law which governs an assessment for the assessment year 1951 52 is the law in force at the time when the Finance Act, 1951, came into force; accordingly, so the argument proceeds, paragraph 2 of the Removal of Difficulties Order, 1950, as it stood on April 28, 1951, when the Finance Act, 1951, came into force, will apply in the present case. We consider this argument to be unsound. The Explanation, though added in 1956, explains the meaning of paragraph 2 of the Removal of Difficulties Order, 1950 and says in express terms that the paragraph shall be deemed always to have had that meaning. Section 12 by the very nature of its intent and purpose confers on the Central Government power to make an order to remove a difficulty which has already arisen, and the power to re. move the difficulty must necessarily include the power to remove the difficulty from the time it arose. The Central Government has, therefore, the power to make an order or give a direction so as to remove the difficulty from the very beginning, and that is what the notification of 1956 does. It applies to the assessment of 1951 52 indeed it applies to all assessments made under the Indian Income tax Act in which paragraph 2 of the Removal of Difficulties Order, 1950, operates. The last challenge to the validity of the notification of 1956 is that it contravenes article 14 of the Constitution, because it discriminates between different classes of tax payers. Learned Counsel for the respondent has asked us to consider the cases of assessees in three different areas which subsequently come in a Part B State: in one area there was no law relating to 329 income tax; in, the second there was a law relating to income tax under which written down value was computed on the basis of depreciation actually allowed year after year, while in the third the written down value was computed in the manner provided under the Hyderabad Income tax Act; it is pointed out that on the extension of the Indian Income tax Act (read with paragraph 2 of the Removal of Difficulties Order, 1950 and the Explanation) to those areas, the assessee in the first area will get depreciation allowance on the actual cost; in the second area he will get such allowance on the basis of actual cost less depreciation actually allowed; and in the third area he will get such allowance on the actual cost less depreciation taken into account. It is contended that this resultant discrimination is arbitrary and without any rational justification, We think that learned Counsel for the respondent has ignored one essential consideration which clearly vitiates his argument. In the matter of depreciation allowance, the assessee in the three areas in the example given by him do not stand on the same footing; they are not situated alike so as to be entitled to be treated alike. It is obvious that an assessee from an area where there was no income tax law at all can never say that in the matter of depreciation allowance as respects buildings, machinery, plant etc., he is on a par with a person in an area where there was a law relating to income tax allowing depreciation on such buildings, machinery, plant etc. The same would be the position with regard to areas where the previous law as to depreciation was different. Indeed, to treat all these persons alike would be tantamount to unequal treatment. In our view, the notification of 1956 creates no unequal treatment of persons in a like situation ; it applies to all who are in a like situation, namely, all those to whom paragraph 2 of the Removal of Difficulties Order, 1950, applies. We consider that the challenge to the notification based on article 14 is wholly unsubstantial. It has not been disputed before us that a change in 42 330 law validly made and applicable to a case pending in appeal must be considered and given effect to by the Appellate Court. The conclusion we have reached is that the notification of 1956 was validly made and applies to the present case. In view of this conclusion we have considered it unnecessary to examine the notification of 1953 or the reasons for which the High Court held that notification to be bad. For the reasons given above, we allow this appeal and set aside the judgment and order of the High Court dated February 16, 1954. The question referred to the High Court is answered in favour of the appellant. The appellant has succeeded by reason of the notification of 1956 and taking that circumstance into consideration, we direct that there will be no order for costs for the hearing in this Court. Appeal allowed.

Prior to January 26, 1950, when the erstwhile State of Hyderabad merged in the Union of India and became a Part B State the respondent company was assessed to income tax under the Hyderabad Income tax Act, by which depreciation allowance was given to it on the basis of the written down value of its assets, such as buildings, machinery, plants, etc., in accordance with cl. (C) of section 12(5) of that Act, which provided that in the case of assets acquired before the previous year and before the commencement of the Act, the written down value would be the actual cost to the assessee less (1) depreciation at the rates applicable to the assets calculated on the actual costs for the first year since acquisition and for the next year on the actual cost diminished by the depreciation allowance for one year and so on, for each year upto the commencement of that Act, and, (ii) depreciation actually allowed to the assessee on such assets for each financial year after the commencement of the Act. After the merger of Hyderabad with the Union of India, by sections 3 and 13 of the Finance Act, 950, the taxation laws in force in the State were repealed and the Indian Income tax Act, 1922, was extended to that area; and in exercise of the powers conferred by section 12 of the Finance Act, 1950, the Central Government issued a notification dated December 2, 1950, called the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950. Paragraph 2 of the Order provided that " in making any assessment under the Indian Income tax A ct, 1922, all depreciation actually allowed under any laws or rules of a Part B State. shall be taken into account in computing the aggregate depreciation allowance referred to in proviso (c) to section 10(2)(vi) and the written down value under section 10(5)(b) of the said Act ". For the assessment year 1951 52 the respondent was assessed for the first time under the Indian Income tax Act, and basing its claim on para. 2 of the aforesaid Order it asked for 319 the value thereof at their inception and deducting therefrom such depreciation as was allowed for the three assessment years in which it was assessed under the Hyderabad Income tax Act. 7 By order dated November 30, 1951, the Income tax Officer disallowed the respondent 's claim on the ground that it was against the principle inherent in granting depreciation allowance which must decrease from year to year. The matter was taken up to the Supreme Court and while it was pending there, on May 8, 1956, the Central Government issued a notification in exercise of its powers conferred on it by section 12 of the Finance Act, 1950, whereby an explanation was added to the aforesaid para. 2 as follows: "For the purpose of this paragraph, the expression "all depreciation actually allowed under any laws or rules of a Part B State " means and shall be deemed to have always meant the aggregate allowance for depreciation taken into account in computing the written down value under any laws or rules of a Part B State or carried forward under the said laws or rules. " The respondent challenged the validity of the notification of 1956 and also its applicability to the present case on the grounds (1) that it was ultra vires the powers conferred on the Central Government by section 12 of the Finance Act, 1950, (2) that it contravened article 14 of the Constitution, and (3) that, in any case, it could have no retrospective effect. Held : (1) that the true scope and effect of section 12 was that it was for the Central Government to determine if any difficulty of the nature indicated in the section had arisen and then to make such order, or give such direction, as appeared to it to be necessary to remove the difficulty, the legislature having left the matter to the executive. Pandit Banarsi Das Bhanot v The State of Madhya Pradesh and Others, ; , relied on. In the present case, a difficulty had arisen, because if depreciation actually allowed under the Hyderabad Income tax Act was taken into account in computing the aggregate depre ciation allowance and the written down value, an anomalous result would follow, namely, depreciation allowance to be allowed to the assessee in the accounting year under the Indian Income tax Act would be more than what was allowed in previous years under the Hyderabad Income tax Act. Consequently, the Central Government was within its power under section 12 in making the notification dated May 8, 1956. (2) that the notification of 1956 applied to all those to whom para. 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, was applicable and created no unequal treatment of persons in the like situation. Accordingly, the notification did not contravene article 14 of the Constitution. (3) that the Central Government had the power under section 12 of the Finance Act, 1950, to make an order or give a direction so as to remove difficulties which arose in the very beginning 320 and, therefore, the notification, though added in 1956, was valid and was applicable to the assessment of 1951 52.

iminal Appeal No. 73 of 1966. 105 Appeal from the judgment and order dated March 31, 1965 of the Calcutta High Court in Criminal Revision No. 921 of 1963. P.K. Chatterjee, for the appellants. B.K. Bhattacharya, G.S. Chatterjee for P.K. Bose, for the respondent. The Judgment of the Court was delivered by Bachawat, J. The complainant Sarajit Kumar Bose was a forest ranger having his headquarters at Bara Bazar range in the district of Purulia. Bibhuti Bhusan Dasgupta was the editor and Ram Chandra Adhikari was the printer and publisher of "Mukti" a local Bengali weekly journal with its registered office at Purulia town. At the instance of Sripati Gope, a resident of Bhuni, P.S. Patanda, district Singhbhum they published a letter in the weekly issue of Mukti dated the 4th Asar, 1388 B.S. corresponding to June 19, 1965. The letter which bore the caption "Wild law in the land of the Nags (barbarians)", contained several defamatory statements concerning Sarajit Bose. On his complaint, Sripati Gope and Bibhuti Dasgupta were charged with an offence punishable under sec. 500 of the Indian Penal Code and Ram Adhikari was charged with an offence punishable under sec. 501 I.P.C. They were tried jointly by Shri S.M. Chatterjee, Magistrate, First Class, Purulia. The Magistrate convicted all of them of the offences with which they were respectively charged, and passed appropriate sentences. The appeals filed by them against the order were dismissed by the Sessions Judge, Purulia. The order concerning the conviction and sentence of Sripati Gope has now become final. The two courts rejected his claim for protection under the first exception to section 499 I.P.C. A revision petition filed by Bibhuti Dasgupta and Ram Adhikari was dismissed by the High Court. They have filed the present appeal after obtaining a certificate under Article 134(1 ) (c) of the Constitution. All the courts concurrently found that the publication was not made by the appellant in good faith for the public good and that they were not entitled to the protection of the ninth exception to sec. 499 as claimed by them Mr. Chatterjee attacked this finding. The ninth exception to section 499 provides that "it is not defamation to make an imputation on the character of another provided that the imputation be made in good faith for the protection of the interests of the person making it, or any other person, or for the public good. " Section 52 provides that "nothing is said to be done or believed in "good faith" which is done or believed without due care and attention. " The appellants ' case is that on their L2Sup C[169 8] 106 behalf one Dol Gobinda Chakravarty made enquiries and was satisfied about the truth of the defamatory statements. It appears that Dol Govinda did not make any report to the appellants in writing. The enquiries made by him did not reveal that all the defamatory imputations in the publication were true. On the materials on the record it is impossible to say that the appellants published the statements in good faith or with due care and attention. In Harbhajan Singh vs State of Punjab (1) the Court held that the accused person was entitled to the protection of the ninth exception to sec. 499 if he. succeeded in proving a preponderance of probability that the case was within the exception. We do not find that the courts below placed upon the appellant any heavier burden of proof. Mr. Chatterjee next contended that the trial of Bibhuti Dasgupta was illegal as he was not personally examined under sec. '342 of the Code of Criminal Procedure. To appreciate this argument it is necessary to refer to the following facts. On September 27, 1961 the Magistrate examined the complainant and issued summons to. the three accused. On the application of Bibhuti Dasgupta the Magistrate passed an order o.n December 12, 1961 dispensing with his personal appearance and permitting him to appear by his pleader. On September 17, 1962 the examination of prosecution witnesses was concluded. On the same day Ram Adhikari was examined under sec. On December 21, 1962 the lawyer representing Bibhuti Dasgupta flied a petition stating that he was undergoing an operation in Calcutta and that the lawyer may be examined on his. behalf under sec. On the same date the Magistrate allowed the application and examined his lawyer. On April 17, 1963 the Magistrate delivered judgment. The plea that the trial of Bibhuti Dasgupta was vitiated on account of his non examination under section 342 was not taken before the Magistrate or the Sessions Judge or at the hearing of the revision petition in the High Court. It was taken for the first time in the petition for grant of the certificate under article 134( 1 )(c). In this background let us examine the contention. As a general rule save where the magistrate dispenses with the personal attendance of the accused person the first step in a criminal proceeding is to bring him before the magistrate. The attendance of the accused is secured if necessary by summons or by warrant of arrest. Thereafter the inquiry or trial proceeds in his presence. Section 205 of the Code of Criminal Procedure empowers the Magistrate whenever he issues a summons to dispense with the personal attendance of the accused and permit him to appear by a pleader. The section runs as follows : (1) ; 107 "205. (1) Whenever a Magistrate issues a summons, he may, if he sees reason to do so, dispense with the personal attendance of the accused and permit him to appear by his pleader. (2) But the Magistrate inquiring into or trying the case may, in his discretion at any stage of the proceedings, direct the personal attendance of the accused, and, if necessary, enforce such attendance in the manner hereinabove provided. " The form of summons issued to the accused runs as follows "Whereas your attendance is necessary to answer to a charge of (state shortly the offence charged) you are hereby required to appear in person (o.r by pleader, as the case may be) before the (Magistrate) of. on the . day . of . Herein fail not. " Section 540A empowers the magistrate at any stage of an inquiry or trial to dispense with the personal attendance of the accused if he is represented by a pleader. The section is as follows : "540A (1) At any stage of an inquiry or trial under this Code, if the Judge or Magistrate is satisfied, for reasons to be recorded, that the personal attendance of the accused before the Court is not necessary in the interests of justice, the Judge or Magistrate may, if the accused is represented by a pleader, dispense with his attendance and proceed with such inquiry or trial in his absence, and may, at .any subsequent stage of the proceedings, direct the personal attendance of such accused. (2) If the accused in any such case is not represented by a pleader, or if the Judge or Magistrate considers his personal attendance necessary, he may if he minks fit, and for reasons to be recorded by him, either adjourn such inquiry or trial, or order that the case of such accused be taken up or tried separately. " The point in issue is whether the pleader can represent the accused for purposes of sec. 342 and whether the examination of the pleader in place of the accused is sufficient compliance with the section in a case where the magistrate has dispensed with the personal attendance of the accused and permitted him to appear by a pleader. On this question there is a sharp conflict of judicial opinion. Most of the decisions upto 1962 are referred to in Prova Devi vs Mrs. Fernandes(1). In that case a Full Bench of Calcutta High Court by a majority decision held that the magistrate may in his discretion examine the pleader on behalf of the (1) A.I.R. 1962 Cal. 108 accused under sec. This view is supported by numerous decisions of other High Courts, but from time to time many judges expressed vigorous dissents and came to the opposite conclusion. The two sides of the question are ably discussed in the majority and minority judgments of the Calcutta case. After a full examination of all the decided cases on the subject, we are inclined to agree with the minority opinion. The main arguments in favour of the view that the examination of the pleader is sufficient compliance with the provisions of section 342 may be summarized as follows. The pleader authorised to appear on behalf of the accused can do all acts which the accused can do. The representation of the pleader extends throughout the trial except as provided in section 366(2). The form .of the summons shows that the pleader may answer to charge on behalf of the accused at every stage of the proceedings. He may even plead guilty under secs. 242, 243, 251A, 255 and 271. There is no reason why he cannot be examined under section 342. 'That section is subject to and controlled by. section 205. The accused can refuse to answer questions under sec. 342 and there is no point in insisting on his personal attendance if he has no intention to answer them. Accused persons will suffer harassment and inconvenience if the magistrates have no discretion to dispense with their personal examination under section 342. Having considered all these arguments we are not convinced that pleader can be examined in place of the accused under section 342. Section 342 reads as follows : "342. ( 1 ) For the purpose of enabling the accused to explain any circumstances appearing in the evidence against him, the Court may, at any stage of any inquiring or trial without previously warning the accused, put such questions to him as the Court considers necessary, and shall, for the purpose aforesaid, question him generally on the case after the witnesses for the prosecution have been examined and before he is called on for his defence. (2) The accused shall not render himself liable to punishment by refusing to answer such questions, or by giving false answers to them; but the Court and the jury (if any) may draw such inference from such refusal or answers as it thinks just. (3) The answers given by the accused may be taken into consideration in such inquiry. or trial, and put in evidence for or against him in any other inquiry into or trial for, any other offence which such answers may tend to show he has committed. (4) No oath shall be administered to the accused when he is examined under sub section (1 ). " 109 Sub section (1 ) of sec. 342 consists of two parts. The first part gives a discretion to the Court to question the accused at any stage of an inquiry or trial without previously warning him. Under the second part the Court is required to question him generally on the case after the witnesses for the prosecution have been examined and before he is called for his defence. The second part is mandatory and imposes upon the Court a duty to examine the accused at the close of the prosecution case in order to give him an opportunity to explain any circumstances appearing against him in the evidence and to say in his defence what he wants to say in his own words. He is not bound to. answer the. questions but if he refuses to answer or gives false answers, the consequences may be serious, for under sub section (2) the Court may draw such inference from the refusal or the false answers as it thinks fit. Under sub sec. (3) the answers given by the accused may be taken into consideration in the inquiry or trial. His statement is material upon which the Court may act, and which may prove his innocence, (see State of Maharashtra vs Laxman Jairam(1). Under sub sec. (4) no oath is administered to him. The reason is that when he is examined under sec. 342, he is not a witness. Before sec. 342A was enacted, he was not a competent witness for the defence. His statement under sec. 342 was intended to take the place of what he could say in his own way in the witness box. (see Hate Singh vs State of Madhya Bharat(2). Under sec. 342A, he is now a competent witness. But the provisions of sec. 342A does not affect the value of his examination under sec. Under sub section (3) of section 342 his answers may be put in evidence for or against him in other inquiries or trials for other offences. For instance, if in a trial for murder he says that he concealed the dead body and did not kill the victim his statement may be used as evidence against him in a subsequent trial for an offence under sec. The privilege of making a statement under sec. 342 is personal to the accused. The clear intention of the section is that only he and nobody else can be examined under it. This conclusion is reinforced if we look at sec. The whole of his examination including every question put to him and every answer given by him must be recorded in full and interpreted to him in a language which he understands, and he is at liberty to explain or add to his answers; and when the whole is made conformable to what he declares is the truth the record has to be signed by him and the Magistrate. The idea that the pleader can be examined on his behalf is foreign to the language of secs. 342 and 364. It was well observed by Rankin J. in Promotha Nath vs Emperor(3) that: (1) [1962] Supp. 3 S.C.R. 230. (2) A.I.R. 1953 S.C. 468, 470. (3) A.I.R. 1923 Cal. 470, 481. 110 ". the intention of the statute iS that at a certain stage in the case, the Court itself shall put aside all Counsel, all 'pleaders, all witnesses, all representatives, and shall call upon an individual accused with the authority of the Court 's own voice, to take advantage of the opportunity which then arises to. state in his own way anything which he may be desirous. of stating. what is necessary is. that the accused shall be brought face to face solemnly with an opportunity given to him to make a statement from his place in the dock in order that the Court may have the advantage of hearing his defence if he is willing to make one with his own lips? ' The proposition that a pleader authorised to appear on behalf of the accused can do all acts which the accused himself can do at the trial is too wide. If the statute gives the accused a personal privilege or imposes upon him a personal duty, only he can exercise the privilege or perform the duty. Thus under sec. 366(2) the accused must hear the judgment in person unless the sentence is one of fine only or unless, he is acquitted. Under sec. 342A only the accused can give evidence in person and his pleader 's evidence cannot be treated as his. The answers of the accused under section 342 is intended to be a substitute for the evidence which he can give as a witness under sec. The privilege and the. duty of answering questions under sec. 342 cannot be delegated to a pleader. No doubt the form of the summons show that the pleader may answer the charges against the accused, but in so answering the charges, he cannot do. what only the accused can do personally. The pleader may be permitted to represent the accused while the prosecution evidence is being taken. But at the close of the prosecution evidence the accused must be questioned and his pleader cannot be examined in his place. Sections 205 and 540A do not expressly mention that the pleader cannot be examined under sec. 342, but this does not lead to the inference that the pleader can be so examined. On the other hand, secs. 353, 360, 361 and 366 expressly provide that the pleader may represent the accused for certain purposes, but from this fact alone no inference can be drawn that the pleader cannot represent the accused for purposes of section 342 or other sections. It is from, the scheme, purpose and language of sec. 342 that we are driven to the conclusion that the examination under the section must be of the accused person and not his pleader. In Dorabshah vs Emperor(1) the Bombay High Court held that where the accused is permitted to appear by his pleader (1) A.I.R. 1926 Bom. 111 under sec. 205 the pleader may on his behalf be examined and may plead guilty under secs. 242 and 243. Whether the Court can act upon an admission of guilt by the pleader under secs. 242, 243, 251A, 255 and 271 does not directly arise in this case and we express no opinion on it. It is sufficient to say that the language of those sections and the effect of admissions under them are entirely different. We are not impressed with the argument that an accused person will suffer inconvenience and harassment if the Court cannot dispense with his attendance for purposes of sec. The examination under the section becomes necessary when at the close of the prosecution evidence the magistrate finds. that there are incriminating circumstances requiring an explanation by the accused. If there is. no evidence implicating the accused, no explanation from him is necessary and he need not be examined under section 342. If there is evidence implicating him, it is in his interest that he should be examined personally. There are exceptional cases when an examination of the accused personally under sec. 342 is not necessary or possible. Where the accused is a company or other juridical person it cannot be examined personally. It may be that the Court may then examine a director or some other agent on its behalf [see Express Diary Ltd. vs Corporation of Calcutta(1)]. Exceptional cases apart, only the accused in person can be examined under section 342. We therefore hold that the Magistrate should have examined Bibhuti Dasgupta personally and the examination of his pleader was not sufficient compliance with sec. This conclusion does not dispose of Bibhuti Dasgupta 's appeal. Under sec. 537 the conviction and sentence are. not reversable on account of any error, omission or irregularity in any proceedings during the trial unless the error, omission or irregularity has ' in fact occasioned a failure of justice. Mere non examination or defective examination under sec. 342 is not a ground for interference unless prejudice is established. [see Tilakeshwar Singh vs The State of Bihar(2) K.C. Mathew vs The State of Travancore Cochin(3), Ram Shankar Singh vs State West Bengal (4)]. Looking at the facts of this case we do not find that any prejudice was caused to Bibhuti Dasgupta by his non examination under sec. The prosecution evidence was closed on September 17, 1962. Ram Adhikari appeared in Court and was examined personally. Bibhuti Dasgupta did not appear in Court on that date. After 3 months o.n December 21, 1962 his pleader was examined on his behalf at his express request. The Magistrate delivered judgment on April 17, 1963. (1) I.L.R. (2) (3) ; , 1061 2. (4) [1962] Supp. 1. S.C.R. 49, 64 112 On that date Bibhuti Dasgupta was. present in Court. He made no complaint at any time before the Magistrate or the Sessions Judge or the High Court that he had suffered any prejudice. Even in this Court Mr. Chatterjee could not point out what further explanation could have been given by Bibhuti Dasgupta if he had been examined personally. We are satisfied that the omission to examine him under sec. 342 did not cause him any prejudice and has not in fact occasioned a failure of justice. We are, therefore, not inclined to interfere with his conviction and sentence. In the result, the appeal is dismissed. Y.P. Appeal dismissed.

In a defamation case, at the instance of the accused his personal appearance. was dispensed .with by the Magistrate under section 540 A Cr. His advocate was examined under section 342 at the close of the trial and the accused was convicted. On the questions: (i) whether the pleader can represent the accused for purposes of section 342 and whether the examination of the pleader in place of the accused is sufficient compliance with the section in a case where the Magistrate has dispensed with the personal attendance of the accused 'and permitted him to appear by a pleader; and (ii) whether mere non examination of the accused or defective examination under section 342 vitiates the trial, HELD: (i) The privilege of making a statement under section 342 is personal to the accused and the scheme, purpose and language of the section lead to the conclusion that only he and no body else can be examined under it. If the statute gives the accused a personal privilege or imposes upon him a personal duty only he can exercise the privilege or perform the duty. The second part of section 342 is mandatory and imposes upon the court a duty to examine the accused at the close of the prosecution case in order to give him 'an opportunity to explain any circumstances appearing against him in the evidence and to say in his defence what he wants to say in his own words. The answers of the accused under section 342 is intended to be a substitute for the evidence which he can give under section 342 A and the privilege and duty of 'answering questions under section 342 cannot be delegated to a pleader. Though sections 205 and 540 A which empower a Magistrate to dispense with the personal appearance of the accused do not expressly mention that the pleader cannot be examined under section 342, it does not lead to the inference that the pleader can be so examined. G H, 109 B; 110 C D, 109 E; 110 F H] Dorabshah vs Emperor, A.I.R. 1926 Bom. 218, disapproved. (ii) Under section 537 the conviction and sentence are not reversible on account of any error, omission or irregularity in 'any proceedings during the trial unless the error, omission or irregularity has in fact occasioned a failure of justice. Therefore the mere non examination of the accused in the present case, under section 342 was not a ground for interference since no prejudice was established. [111 F] Tilakeshwar Singh vs The State of Bihar, [1955] 2 S.C.R. 105, K.C. Mathew vs The State of Travancore Cochin, [1955] 2 S.C.R. 1057 and Ram Shankar Singh vs State of West Bengal, [1962] Supp. 1 S.C.R. 49, 64, referred to.

ivil Appeal No. 8613 of 1983. From the Judgment and Order dated 21.1.1981 of the Delhi High Court in Civil Writ No. 41 of 1981. P.K.Goswamy and Kailash Vasudev for the Appellant. V.C. Mahajan, Ashok Bhan and C.V. Subba Rao for the Respondent. This appeal was earlier heared by a Division Bench and was referred to a Constitution Bench for examining the question whether a candidate whose name appears in the merit list on the basis of a competitive examination, acquires indefeasible right of appointment as a Government servant if a vacancy exists. Reference was made to the decision in State of Haryana vs Subhash Chander Marwaha and Others, ; ; Miss Neelima Shangla, Ph.D.v. State of Haryana and Others, ; and Jitendra Kumar and Others vs State of Punjab and Others. [1985] 1SCR 899. 570 2. The appellant was selected in the combined Civil Services Examination held by the Union Public Service Commission for appointment to several services including the Indian Police Service (in short `the IPS ') and the Police Services Group `B '. The examination had been held in October, 1977 and the result was announced in May 1978. A combined merit list for the IPS and the Police Services Group `B ' was announced which included the name of the appellant. Out of the total number of 70 vacancies in the IPS announced to be filled up, 54 were of general category and the remaining 16 reserved for Scheduled Castes/Scheduled Tribes candidates. The position of the appellant in the merit list was not high enough to be included in the IPS and he was offered appointment to the Delhi Andaman and Nicobar police Service (hereinafter referred to as the `DANIP ')in Police Service Group `B ' which he accepted. On account of several candidates, allotted to Police Services Group `B 'not Joining, the position of the appellant improved and ultimately he was on the top of the list. In June, 1979, 14 Vacancies arose in the IPS due to selected candidates not joining the service. Out of the same, 11 were in the general category and 3 in the reserved category. Three vacancies in the reserved category were filled up by the candidates who had been earlier appointed in DANIP Service, but no appointments were made to general category vacancies. The appellant, by a representation, prayed that these vacancies also should be filled up. The request was turned down, and the appellant moved the Delhi High Court by a writ application under Article 226 of the Constitution, which was dismissed in limine by the impugned order. The case of the appellant is that since ultimately several vacancies in the general category of the IPS remained unfilled, he was entitled to be appointed in one of them, and the authorities were not right in rejecting his representation. It has been contended that after calculating the number of vacancies in the IPS, it was announced that appointments would be made in 54 vacancies of general category, and steps for recruitment were accordingly taken. The appellant along with others appeared at the elaborate test held for the purpose and he was found qualified for the appointment .In that situation the respondent could not refuse to fill up the vacancies and proceed to appoint the appellant in the Police Services Group `B '. It has been argued that the correct procedure in similar situation was followed with respect to the reserved category and the three vacancies arising in identical situation were filled up from the candidates selected for DANIP Service, and 571 there was no justification to refuse similar benefit to the appellant in the general category. According to the case of the Union of India, the process for the recruitment in question started in 1977, and the tentative service allocation for IPS was completed before the commencement of the foundational course in July, 1978. All the candidates selected for IPS, excepting those who were eligible to appear at the examination for the Indian Administrative Service scheduled to be held in October November, 1978, and such other candidates who had not been finally cleared on account of pending medical examination or character verification had to attend the foundational course. Candidates allocated to Police Services Group `B ' were not required to undergo this course. By June, 1978, 7 more vacancies arose on account of candidates not joining IPS due to various reasons, and 7 persons in order of merit from the joint list of the IPS and the Police Services Group `B ' were allowed to fill up these vacancies. The last one in this list of 7 candidates was Shekhar Singh at serial No. 94. The appellant could not get a chance as his position was 100th. This process of final service allocation was closed on 24.10.1978 or at the latest by 4.11.1978, in view of the process for recruitment for the year 1978, which had already started. The additional vacancies arising later,therefore, remained unfilled. The entire procedure which is followed for recruitment to the Services has been given in several affidavits of the respondent, and detailed information in this regard was supplemented by a further affidavit during the hearing of the hearing of the appeal filed in the light of observations of the Bench. 6.Dealing with the appointments to reserved category,it has been stated in the counter affidavit that the process which was followed in connection with the general category and which was being earlier followed for the reserved category also, was relaxed in pursuance of a policy decision taken after examining all relevant circumstances and materials in regard to this category including the strength of the reserve category in the IPS, the result of the examinations for the year 1975,1976 and 1977. The procedure which was being followed in the past was not relaxed in regard to the general category on account of vital differences obtaining in the relevant conditions in the two categories and the appellant 's plea of alleged discrimination does not have any merit. Similarly the case of one Km. Vandana Srivastava cited by the appellant has also been distinguished and Mr. Goswami, therefore , did not pursue this plea any further in his final reply. 572 7. It is not correct to say that if a number of vacancies are notified for appointment and adequate number of candidates are found fit, the successful candidates acquire an indefeasible right to be appointed which cannot be legitimately denied. Ordinarily the notification merely amounts to an invitation to qualified candidates to apply for recruitment and on their selection they do not acquire any right to the post. Unless the relevant recruitment rules so indicate, the State is under no legal duty to fill up all or any of the vacancies. However, it does not mean that the State has the licence of acting in an arbitrary manner. The decision not to fill up the vacancies has to be taken bona fide for appropriate reasons. And if the vacancies or any of them are filled up, the State is bound to respect the comparative merit of the candidates, as reflected at the recruitment test, and no discrimination can be permitted. This correct position has been consistently followed by this Court, and we do not find any discordant note in the decisions in State of Haryana vs Subhash Chander Marwaha and Others, ; ; Miss Neelima Shangla vs State of Haryana and Others, ; and Jitendra Kumar and Others vs State of Punjab and Others, 8. In State of Haryana vs Subhash Chander Marwaha and Others, (supra) 15 vacancies of Subordinate Judges were advertised, and out of the selection list only 7, who had secured more than 55% marks, were appointed, although under the relevant rules the eligibility condition required only 45% marks. Since the High Court had recommended earlier, to the Punjab Government that only the candidates securing 55% marks or more should be appointed as Subordinate Judges, the other candidates included in the select list were not appointed. They filed a writ petition before the High Court claiming a right of being appointed on the ground that vacancies existed and they were qualified and were found suitable. The writ application was allowed. While reversing the decision of the High Court, it was observed by this Court that it was open to the Government to decide how MANY appointments should be made and although the High Court had appreciated the position correctly, it had ``somehow persuaded itself to spell out a right in the candidates because in fact there were 15 vacancies ' '. It was expressly ruled that the existence of vacancies does not give a legal right to a selected candidate. Similarly, the claim of some of the candidates selected for appointment, who were petitioners in Jitendra Kumar and Others vs State of Punjab and Others, was turned down holding that it was open to the Government to decide how many appointments would be made. The plea of arbitrariness was rejected in view of the facts of the case and it was had that the candi 573 dates did not acquire any right merely by applying for selection or even after selection. It is true that the claim of the petitioner in the case of Miss Neelima Shangla vs State of Haryana was allowed by this Court but, not on the ground that she had acquired any right by her selection and existence of vacancies. The fact was that the matter had been referred to the Public Service Commission which sent to the Government only the names of 17 candidates belonging to the general category on the assumption that only 17 posts were to be filled up. The Government accordingly made only 17 appointments and stated before the Court that they were unable to select and appoint more candidates as the Commission had not recommended any other candidate. In this background it was observed that it is, of course, open to the Government not to fill up all the vacancies for a valid reason, but the selection cannot be arbitrarily restricted to a few candidates notwithstanding the number of vacancies and the availability of qualified candidates; and there must be a conscious application of mind by the Government and the High Court before the number of persons selected for appointment is restricted. The fact that it was not for the Public Service Commission to take a decision in this regard was emphasised in this judgment. None of these decisions, therefore, supports the appellant. Mr. Goswami appearing in support of the appeal has contended that in view of the relevant statutory rules, the authorities were under a duty to continue with the process of filling up all the vacancies until none remained vacant. Reference was made to r. 4 of the Indian Police Service (Cadre) Rules, 1954, rr. 3,4,6 and 7 of the Indian Police Service (Recruitment) Rules, 1954 and rr., 2(1)(a), 2(1)(c), 8 and 13 of the Indian Police Service (Appointment by competitive Examination) Regulations, 1965. We do not think any of these rules comes to the aid of the appellant. Rule 3 of the Cadre Rules directs constitution of separate cadres for States or group of States, and r. 4 empowers the Central Government to determine the strength in consultation with the State Governments. The strength has to be re examined at intervals of 3 years. Rule 3 of Recruitment Rules deals with the constitution of the Service, and r. 4 the method of recruitment. Rules 6 and 7 give further details in this regard. The learned counsel could not point out any provision indicating that all the notified vacancies have to be filled up. Similar is the position with respect to the Competitive Examination Regulations. Regulation 2(1)(a) defines available vacancies as vacancies determined by the Central Government to be filled on the results of the examination, described in Regulation 2(1)(a). Regulation 8 prescribes that the candidates would be considered for appointment to the available 574 vacancies subject to provisions 9 to 12 and Regulation 13 clarifies the position that a candidate does not get any right to appointment by mere inclusion of his name in the list. The final selection is subject to satisfactory report on the character, antecedent and suitability of the candidates. We, therefore, reject that the claim that the appellant had acquired a right to be appointed against the vacancy arising later on the basis of any of the rules. The main contention on behalf of the appellant has been, however, that the authorities in keeping the vacancies arising later unfilled, acted arbitrarily. Mr. Goswami referred to several documents annexed to the special leave petition and affidavits filed on behalf of the parties and contended that although appointments of many candidates in the other services were made in the later vacancies, the vacancy in the Indian Police Service which subsequently became available to the appellant was refused without any just cause, resulting in illegal discrimination. This was emphatically denied on behalf of the respondent. Since the matter did not appear to be free from ambiguity on the basis of the affidavits before us, we decided to examine the factual aspects more thoroughly by examining the other available materials on the records of the Union of India, and accordingly the learned counsel for the respondent got the relevant departmental files called. Two further affidavits were also filed along with photostat copies of a large number of documents, which we examined at some length with the aid of the learned advocates for both sides. From the materials produced before us it is fully established that there has not been any arbitrariness whatsover on the part of the respondent in filling up the vacancies in question or the other vacancies referred to by the learned counsel for the appellant. The process of final selection had to be closed at some stage as was actually done. A decision in this regard was accordingly taken and the process for further allotment to any vacancy arising later was closed. Mr. Goswami relied upon certain appointments actually made subsequent to this stage and urged that by those dates the further vacancies in the Indian Police Service had arisen to which the appellant and the other successful candidates should have been adjusted. We do not find any merit in this contention. It is not material if in pursuance of a decision already taken before closing the process of final selection, the formal appointments were concluded later. What is relevant is to see as to when the process of final selection was closed. Mere completing the formalities cannot be of any help to the appellant. We do not consider it necessary to mention all the details in this connection available from the large number of documents which we closely examined during the hearing at considerable length and do not 575 have any hesitation in rejecting the argument of the learned counsel in this regard based on the factual aspect. So far the decision to adopt a different policy with respect to filling up of the reserved vacancies is concerned the same is justified on account of the special circumstances mentioned in the respondent 's affidavits. The decision to depart from the confirmed policy was taken after a consideration by the authorities of the position in regard to unavailability of qualified candidates from year to year adversely affecting the desired strength of the reserved candidates in the services and cannot be condemned on the grounds of arbitrariness and illegal discrimination. In the result, we do not find any merit in the appeal which is accordingly dismissed, but, in the circumstances, without costs. N.P.V. Appeal dismissed.

On the basis of the results of the combined Civil Services Examination held by the Union Public Service Commission for appointment to several Services and the position in the combined merit list for the Indian Police Service and Police Services, Group `B ' the appellant was appointed to the Delhi Andaman and Nicobar Police Service,also Known as DANIP. Subsequently when certain vacancies arose in the Indian Police Service, due to selected candidates not joining the Service, and only the reserved category vacancies were filled up by the candidates, who had been earlier appointed in DANIP Service, the appellant who came to occupy top position, represented to the authorities for filling the general vacancies also, but his request was turned down .Hence the appellant filed writ application before the High Court, which was dismissed in limine . In the appeal before this Court, on behalf of the appellant it was contended that since ultimately several vacancies in the general category of the IPS remained unfilled, he was entitled to be appointed in one of them, that since 54 vacancies were notified for general category and he was found qualified for the appointment, the respondent could not refuse to fill up the vacancies, and there was no justification to refuse to follow the procedure adopted in similar situation with respect to the reserved category, in regard to the general category vacancies also and that in view of the relevant statutory rules, the authorities were under a duty to continue with the process of filling up the vacancies until nonremained vacant, and by keeping the posts unfilled, they had acted arbitrarily. 568 On behalf of the respondent Union of India it was contended that the tentative service allocation for IPS was completed before the commencement of the foundational course for the IPS, and the process of final service allocation was closed after filling up certain vacancies, which had arisen, since the process for recruitment for the next year had already started, and hence the additional vacancies arising later remained unfilled, that the process followed in connection with the reserved category, was not followed in regard to the general category vacancies on account of vital differences obtaining in the relevant conditions in the two categories, and hence there was no discrimination or arbitrariness, in keeping the general category vacancies unfilled. Dismissing the appeal, this Court HELD: 1.1 Even if vacancies are notified for appointment and adequate number of candidates are found fit, the successful candidates do not acquire an indefeasible right to be appointed. Ordinarily, the notification merely amounts to an invitation to qualified candidates to apply for recruitment and on their selection they do not acquire any right to the post. Unless the relevant recruitment rules so indicate, the State is under no legal duty to fill up all or any of the vacancies. However, it does not mean that the State has the licence of acting in an arbitrary manner. The decision not to fill up the vacancies has to be taken bona fide for appropriate reasons. And if the vacancies or any of them are filled up, the State is bound to respect the comparative merit of the candidates, as reflected at the recruitment test, and no discrimination can be permitted. [572A C] State of Haryana vs Subhash Chander Marwaha and Others,[1974] 1 SCR 165; Miss Neelima Shangla vs State of Haryana and Others, ; and Jitendra Kumar and Others vs State of Punjab and others, , referred to. 1.2 The appellant had not acquired a right to be appointed against the vacancy arising later on the basis of any of the rules, namely, Rule 4 of the Indian Police Service (Cadre) Rules, 1954, Rules 3,4,6 and 7 of the Indian Police Service (Recruitment) Rules, 1954 and Regulations 2(1)(a) and (c), 8 and 13 of the Indian Police Service (Appointment by Competitive Examination) Regulations, 1955.These Provisions do not indicate that all the notified vacancies are to be filled up.[573G,574B] 1.3 From the materials placed before the Court it is fully estab 569 lished that there has not been any arbitrariness whatsoever on the part of the respondent in filling up the vacancies in question or other vacancies. The process of final selection had to be closed at some stage as was actually done. A decision in this regard was accordingly taken and the process for further allotment to any vacancy arising later was closed. It is not material if in pursuance of a decision already taken before closing the process of final selection, the formal appointments were concluded later. What is relevant is to see as to when the process of final selection was closed. Mere completing the formalities dose not give any right to appointment. [574E G] 1.4 The decision to adopt a different policy with respect to filling up of the reserved vacancies is justified on account of the special circumstances. The decision to depart from the confirmed policy was taken after consideration by the authorities of the position in regard to unavailability of qualified candidates from year to year adversely affecting the desired strength of the reserved candidates in the services and cannot be condemned on the grounds of arbitrariness and illegal discrimination. [575B]

ivil Appeals Nos. 1264 and .1265 of 1968. Appeals from the judgment and order, dated March 18, 1968 of the Patna High Court in Civil Writ Jurisdiction Cases Nos. 235 and 287 of 1967. C.K. Daphtary, Attorney General, Saptami Jha and B.P. Jha, for the appellant (in both the appeals). D. Goburdhun, for respondent No.1 (in both the appeals). B.P. Singh and R.B. Datar, for respondent No. 2 (in both the appeals). The Judgment of the Court was delivered by Bachawat, J. Seerval persons including oen Ram Bichar Singh filed applications for the grant of a permanent stage carriage permit for the Chapra Masrakh Siwan Gopalganj route before June 15, 1963 and last date appointed for the receipt of the applications .by the North Bihar Regional Transport Authority. Ram Bichar Singh died on April 12, 1965 before the final disposal of his application. His widow Dhani Devi succeeded to the possession of the transport vehicles left by him and accordingly under section 61(2) of the , the Regional Transport Authority,transferred to her all the permits held by him for 509 other routes. On May 4, 1966, the Regional Transport Authority considered all the applications, allowed Dhani Devi to prosecute the application filed by her husband and directed the grant of the permit to her. Sant Bihari Sharma, Chandra Kriti Singh and other unsuccessful applicants filed appeals against the order under 64. At the hearing of the appeals it was contended that the order was without jurisdiction as Dhani Devi had no right to prosecute the application filed by her husband. The State Transport Appellate Authority accepted the contention, set aside the order appealed from and directed the grant of the permit to Sant Bihari Sharma and in case of his failure to comply with certain conditions gave the second preference to Chandrakriti Singh. Dhani Devi, .Chandrakiriti Singh and another applicant filed revision petitions against the order under section 64A. The Transport Minister allowed the revision petition of Dhani Devi and restored the order of the Regional Transport Authority. He held that the order of the Regional Transport Authority was not without jurisdiction. Sant Bihari Sharma and Chandrakriti Singh filed two writ petitions in the Patna High Court challenging the said order. The High Court allowed the petitions, quashed the order for the grant of permit to Dhani Devi and remanded the matter for disposal according to law. The present appeals have been filed by Dhani Devi against the orders passed by the High Court. The sole question in this appeal is whether on the death of an applicant for a stage carriage permit in respect of his transport vehicles the Regional Transport Authority has power to allow the person succeeding to the possession of the vehicles to prosecute the application filed by the deceased applicant. No express provision on the subject is to be found in the or the Rules framed thereunder. Order 22 of the Code of Civil Procedure does not apply to proceedings under the . Section 306 of the has no application as no executor or administrator was appointed to the estate of the deceased Ram Bichar Singh. ' No transport vehicle can be used save in accordance with a permit issued under Chapter IV of the . Four types of permits may be issued under Chapter IV, viz., stage carriage permit, (sections 46 to 48); contract carriage permit (sections 49 to 51); private carrier 's permit, (sections 52 and 53) and public carrier 's permit, (sections 54 to 56). A person in possession of a transport vehicle is not entitled to a permit as a matter of right, see Verappa Pillai vs Raman & Raman Ltd. (1) His only right is to make an application for the grant of a permit under section 45 and to a consideration of the application in accordance with the provisions of the Act. If he dies after obtaining the permit, the Regional (1) ; , 591,595. C1/69 16 510 Transport Authority has power under section 61(2) to transfer the permit to the person succeeding to the possession of the vehicles covered by the permit. We are inclined to think that in the case of death of the applicant before the final disposal of his application for the grant of a permit in respect of his vehicles the Regional Transport Authority has power to substitute the person succeeding to the possession of the vehicles in place of the deceased applicant and to allow the successor to prosecute the application. As the relief sought for in the application is dependent upon and related to the possession of the vehicles, the application is capable of being revived at the instance of the person succeeding to the possession of the vehicles. Under section 57 an application for a stage carriage permit or a public carrier permit must be made within the appointed time and published in the prescribed manner. The representations relating thereto must also be made before the appointed time. In the event of the death of an applicant after the expiry of the time appointed for making the applications, the person succeeding .to the possession of the vehicle cannot, having regard to the lapse of time, make another application in his own right. The successor cannot obtain the permit unless he is allowed to prosecute the application filed by his predecessor and we see no reason why he cannot be permitted to do so. Where the successor is allowed to prosecute the application, the Regional Transport Authority may have to take into consideration many matters personal to the successor, such as his experience, the facilities at his disposal for operating the services and his adverse record, if any. The matters personal to the deceased applicant can no longer be taken into account. The rival applicants should, if necessary be given suitable opportunity to file objections against the grant of the permit to the successor. Section 57 does not deal with the situation arising on the death of an applicant nor has it prescribed any time for the making of an application for substitution of the successor or for the filing of objections against the grant of the permit to him. In the absence of any statute or statutory rule the Regional Transport Authority may devise any reasonable procedure for dealing with the situation. As stated in American Jurisprudence, 2d. 2 (Administrative Law), article 340, p. 155: "Where the statute does not require any particular method of procedure to be followed by an administrative agency, the agency may adopt any reasonable method to carry out its functions." (see also Corpus Juris Secundum, vol.73 (Public Administrative Bodies and Procedure, article 73, p. 399). The Regional Transport Authority has complete discretion in the matter of allowing or refusing substitution. It is not bound to embark upon prolonged 511 investigation into disputed questions of succession. Nor is it bound to allow substitution if such an order will delay the proceedings unreasonably or will otherwise be detrimental to the interests of the public generally. Under section 57(1) an application for a contract carrier 's permit or a private carrier 's permit may be made at any time, and therefore the Regional Transport Authority can more readily allow the successor to prosecute the application filed by his predecessor. The Regional Transport Authority may similarly deal with the situation arising on the death of an applicant for the variation of the permit under section 57(8) or the renewal of the permit under section 58. Likewise, in the case of the death of an applicant during the pendency of an appeal under section 64A or a revision petition under section 64A the appellate or the revisional authority has power if it thinks fit to substitute the successor in place of the deceased applicant in the records of the proceedings. We may now refer to the relevant decisions on the subject under consideration. In Ratanlal vs State Transport Authority(1) one Munnalal died during the pendency of appeals filed by him against the orders rejecting his application for the grant of a stage carriage permit and directing the issue of the permit to another applicant. The appellate authority refused to order substitution of his son Ratanlal in his place. Ratanlal filed a writ petition challenging the order. The Allahabad High Court dismissed the petition. It held that the right to apply for the grant of a permit was not heritable or transferable and Ratanlal 's heir had no right to continue the appeals. In Meenakshi vs Mysore S.T.A. Tribunal(2) several persons including Gopalassetty applied for the grant of a stage carriage permit. The Regional Transport Authority decided to grant the permit to another applicant. Unsuccessful applicants other than Gopalassetty filed appeals against the order. During the pendency of the appeals Gopalassetty died. The appellate tribunal allowed the appeals and remanded the matter to the Regional Transport Authority for fresh disposal. After the matter went back to the Regional Transport Authority, the widow of Gopalassetty was substituted in his place and was allowed to prosecute the application presented by him. On a consideration of all the applications the Regional Transport Authority granted the permit to the widow of Gopalassetty. The order was set aside by the appellate tribunal on the ground inter alia that the widow could not continue the application filed by Gopalassetty. On a writ petition filed by the widow, the Mysore High Court set aside the order of the appellate tribunal and restored the order of the Regional Transport Authority. It held that the application presented by Gopalassetty could be (1) A.I.R. 1957 All. 471. (2) A.I.R. 512 prosecuted by his widow. The decision of the Mysore High Court was reversed by this Court on another point in Hanuman Transport Ca. vs Meenakshi(1). But this Court then declined to express any opinion on the question whether the successor can be permitted to prosecute the application filed by his predecessor. In Maruthuvanan vs Balasubramaniam(2) two partners of a firm filed an appeal ' from an order rejecting their application for the grant of a permit. During the pendency of the appeal one of the partners died. The Madras High Court held that the appeal could be continued by the surviving partner. In Kuppuswami vs Ramchandran(3) one Lakshimi applied for a variation of the stage carriage permits held by her. Her application was rejected by the Regional Transport Authority. She filed a revision petition against the order under section 64A. During the pendency of the revision petition she died. The State Transport Appellate Tribunal permitted the guardian of her minor legal representatives to continue the revision petition, set aside the order of the Regional Transport Authority and granted the variation sought for. Two of the rival operators filed writ petitions challenging the order. The Madras High Court held that the legal representative of Lakshimi could continue the revision petition. For the reasons already given, we are not inclined to agree with the Allahabad decision. In Director of Public Works vs Ho Po Sang & Ors.(4) the Privy Council held that the right of a crown lessee of premises in Hongkong to get petition and cross petition for the grant of a rebuilding certificate pursuant to the proposal of the Director of Public Works to be considered by the Governor in Council under sec. 3B of the Landlord and Tenant Ordinance (Hong Kong), 1947 was not a right or a privilege either accrued or acquired within the meaning of see. 10 of the Interpretation Ordinance of Hong Kong, corresponding to sec. 38 of the Interpretation Act, 1889 and that on the repeal of the Ordinance, the proceedings could not be continued and the Governor could not pass any order under section 3B. This decision is not relevant, as we are not concerned in the present case with the effect of repeal of the on a pending application for the grant of a permit. Let us now turn to the facts of the present case. The appellant 's husband Ram Bichar Singh made 'an application for the grant of a stage carriage permit. Upon his death during the pendency of the application, the Regional Transport Authority allowed the appellant to prosecute the application filed by him. ' She made no formal application for substitution; but no objection was raised on that ground nor was any adjournment asked (1) C.A.No. 794/63 decided on 20 12 1963. (2) A.I.R.1963 Mad. 292. (3) A.I.R.1964 Mad. 356. (4) ; 513 for by the rival claimants in order to enable them to file objections. Ram Bichar Singh is said to have left behind other heirs also, but no objection was taken on the ground of their nonjoinder. The Regional Transport Authority directed the grant of the permit to the appellant. On the materials on the record, the Regional Transport Authority found that the appellant was an experienced and displaced operator. That finding was not challenged in appeal. The only point taken in the appeal was that the application of Ram Bichar Singh had abated and that the Regional Transport Authority had no power to allow her to continue the application. The Appellate Authority accepted the contention and set aside the order directing the grant of the permit to the appellant. The Transport Minister rightly set aside the order of the Appellate Authority and held that the Regional Transport Authority has power to permit her to prosecute the application filed by her deceased husband. In our opinion, the High Court was in error in setting aside the order of the Transport Minister. In the result, the appeals are allowed, the order of the High Court is set aside and the order of the Transport Minister is restored. There will be no order as to costs. G.C. Appeals allowed.

The appellant 's husband was one of the applicants for a permanent stage carriage permit on a route under the jurisdiction of the North Bihar Regional Transport Authority. On her husband 's death during the pendency of the aforesaid application, the appellant came into possession of all his transport vehicles. The Regional Transport Authority allowed the appellant to prosecute the application and directed the grant of the permit to her. The appeal filed by the unsuccessful applicants against this order was allowed by the State Transport Authority but the Transport Minister, in revision under section 64A of the , decided in favour of the appellant. Against the orders of the Transport Minister writ petitions were filed in the High Court and were allowed. The ,appellant came to this Court. The question for consideration was whether on the death of an applicant for a stage carriage permit in respect of his transport vehicles the Regional Authority has power to a11ow the person succeeding to the possession of the vehicles, to prosecute the application filled by the deceased applicant. HELD: The High Court was in error in setting aside the order of the Transport Minister., A person in possession of a transport vehicle is not entitled to a permit as a matter of right. His only right is to make an application under section 45 of the and to a consideration of the application under the provisions of the Act. If he dies after obtaining the permit, the Regional Transport Authority has power under section 61(2) to transfer the permit to the person succeeding to the possession of the vehicles covered by the permit. In the case of death of the applicant before the final disposal of his application for the grant of a permit in respect of his vehicles the Regional Transport Authority has power to substitute the person succeeding to the possession of the of the. deceased applicant. As the relief sought for in the application is dependent upon and related to the possession of the vehicles, the application is capable of being revived at the instance of the person succeeding to the possession of the vehicles. [509 G 510 C] Verappa Pillai.v. Raman. & Raman Ltd., ; , 591, 595. referred to. Under section 57 an application for a stage carriage permit or a public carrier permit must be made within the appointed time and published in the prescribed manner. The representations relating thereto must also be made at the appointed time. In the event of the death of the applicant after the expiry of the time appointed for making the application, the person succeeding to the possession of the vehicles cannot, having regard to the lapse of dine, make another application in his own right. 508 The successor cannot obtain the permit unless he is allowed to prosecute the application filed by his predecessor and there is no reason why he cannot be permitted to do so. Section 57 does not deal with the situation arising on the death of an applicant nor has it prescribed any time for the making of an application for substitution of the successor or for the filing of objections against the grant of the permit to him. In the absence of any statute or statutory rule the Regional Transport Authority may devise any procedure for dealing with the situation. The Regional Transport Authority has complete discretion in the matter of allowing or refusing substitution. It is not bound to embark on a prolonged investigation into disputed questions of possession. Nor is it bound to allow substitution if such order will delay the proceedings unreasonably or will otherwise be detrimental to the interests of the public generally. [510 C 511 A] The same principle would apply to applications under sections 57(1), 58(8) and 58, as well as to appeals under section 64, and revisions under section 64A. [511 B] Ratanlal vs State Transport Authority, A.I.R. 1957 All 471, disapproved Meenakshi vs Mysore S.T.A. Tribunal, A.I.R. 1963 Mys. 279, Hanuman Transport Co. vs Meenakshi, C.A. No. 794/63 dt. 20 12 63, Maruthavanan vs Balasubramaniam A.I.R. 1963 Mad. 292, Kuppu swarmi vs Ramchandran, A.I.R. 1964 Mad. 356, and Director of Public 'Works vs Ho Po Sang & Ors., [1961] A.C. 901, referred to.

l Appeals No. 1760 of 1967. Appeals from the judgment and order dated February 1, 2, 1966 of the Bombay High Court in Income tax Reference No. 60 of 1961. B. Sen, section K. Aiyar and B. D. Sharma, for the appellant. M. C. Chagla and A. K. Verma, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by certificate from a judgment of the Bombay High Court in an Income tax reference. The respondent Company which is the assessee carries on business of the manufacture and sale of yam and cloth in Bangalore. In 1914 it started a Provident Fund for the benefit of the monthly rated employees and this fund was called "The Staff Provident Fund". Subsequently another fund was started known as the "Work men Provident Funds". These funds were, not recognised under the provisions of Chapter IXA of the Income tax Act, 1922 (hereinafter called the Act). The employees,and the assessee made contributions to the two funds from time to time. The Employees ' Provident Funds Act (to be referred to as the Provident Funds Act) came into force on 31st October, 1952. The amounts standing to the credit of the two funds on that date so far as they are referable to the contributions by the Company stood as follows : (1) Staff Provident Fund: Company 's contributions upto 31 10 1952 89,605 9 2 Proportionate interest thereon 19,596 8 7 1,09,202 1 9 (2) Workmen 's Provident Fund : Company 's contribution upto 31 10 1952. 1,83,190 13 2 Proportionate interest thereon9,379 2 5 1,92,569 15 10 3,01,772 1 7 The assessee came within the first schedule to the Provident Fund Act and therefore it applied under section 17 for exemption from the operation of the provisions of that Act. A provisional exemption was given on 1st July, 1953. The assessee was, however, informed that pending the grant of exemption it need not make any payment of the accumulations to the Regional Provident Fund Commissioner, as was enjoined under the Provident 470 Fund Act. Following some correspondence between the Com missioner and the assessee the latter sought cancellation of the exemption by, means of a letter dated 11th July, 1955. The Provident Fund Commissioner cancelled the exemption granted under section 17, of the Provident Funds Act and required the assessee to comply with all its provisions and the Scheme framed thereunder and further to transfer all the provident fund 's accumulations to the Employees Provident Fund immediately. In accordance with the communication from the Commissioner, the assessee transferred an amount which included a sum of Rs. 3,01,772 1 7 which represented the assessee 's contribution to the two funds upto 31st October, 1952. The assessee claimed deduction in the assessment for the assessment year 1957 58 on account of the transfer of the amount of Rs. 3,01,772 1 7 to the Provident Fund Com missioner. The Income Tax Officer disallowed this claim on the ground that the amount in question was allowable to be treated ,as capital expenditure ' under the provisions of section 58K of the Act. An appeal was taken to the Appellant Assistant Commissioner but it failed. The assessee appealed to the Appellate Tribunal. The Tribunal held that there was a transfer of the fund to Trustees which came within the scope of Section 58K of the Act and therefore the amount was not deductible nor could the deductions be allowed under section 10(1) or Section 10(2 (xv). The assessee sought reference and the following two questions were referred : (1) Whether the provisions of Section 58K of the Income tax Act apply to the transf er of the sum of Rs. 3,01,772 1 7 to the Regional Provident Fund Commissioner ? (2) If the answer to the above question is in the negative , whether the sum of Rs. 3,01,772 1 7 is allowable as a deduction in arriving at the commercial profits under section 10(1) or is an allowable deduction under section 10(2) (xv) of the Income tax Act in the computation of the assessable "business" profits. The High Court examined in detail the provisions contained in Chapter IXA of the Act. It was observed that the scheme of section 58K in that Chapter was that though an employer could not claim any allowance at the time he transferred his own accumulated contributions to the Provident Fund to the trustees,, he could claim exemption ' in respect thereof at the time his share of contributions was paid to the employee provided arrangements were made to deduct from those amounts the income tax payable by his employee. The transfer of the fund contemplated under section 58K was a voluntary transfer by an employer of the Provident Fund maintained by him to the trustees to hold it in trust for 471 the benefit of his employees. The High Court, however, proceeded to consider the matter even on the assumption that the transfer of the fund contemplated by section 58K(1) Would also include involuntary transfer. According to the High Court the position that emerged on a consideration of the materials provisions of the Provident Funds Act and the Scheme framed thereunder was as follows : For the administration of the statutory Provident Fund which came into existence and stood constituted on the framing of the Scheme, a Board of trustees called the Central Board of Trustees was constituted. On the framing of the Scheme and the constitution of the statutory Provident Fund the employers in the industries to which the Provident Funds Act applied were required to transfer the accumulated balances of the Provident Fund, if any, which had been maintained by them. Similarly, trustees of the private Provident Fund constituted by an employer were also required to transfer the accumulated balances to the statutory Provident Fund. Such employers were further required to make their own annual contributions according to the prescribed limit to that fund. The Board of trustees and the Officers administering the fund were required to open a Provident Fund account and in that account a separate account was maintained of each member showing the balance to his credit containing the contributions of the employer. The High Court was of the view that a trust in its true sense had not been constituted by the Provident Funds Act or the Scheme and that the transfer was not to the trustees but to the fund The first question was answered in the negative and in favour of the assessee. The answer to the second question was given in the affirmative, it being held that the deduction claimed was allowable under section 10 (2) (xv) and that the provisions of section 10 (4) (c) did not 'operate as a bar to the claim made by the assessee for deduction of the amount in question. Section 58K of the Act was in those terms "58K. TREATMENT OF FUND TRANSFERRED BY EMPLOYER TO TRUSTEE: (1) Where an employer who maintains a provident fund (whether recognised or not) for the benefit of his employees and has not transferred the fund or any portion of it, transfers such fund or portion to trustees in trust for the employees participating in the fund, the amount so transferred shall be deemed to be of the nature of capital expenditure; (2) When an employee participating in such fund is paid the accumulated balance due to him therefrom, any portion of such balance as repre 472 sents his share in the amount so transferred to the trustee (without addition of interest, and exclusive of the employee 's contributions and interest thereon) shall, (if the employer has made effective arrangements to secure that tax shall be deducted at source from the amount of such share when paid to the employee,) be deemed to be an expenditure by the employer within the meaning of [clause (xv)] of sub section (2) of section 10, incurred in the year in which the accumulated balance due, to the employee is paid. For the application of sub section (1) the following conditions must be satisfied : (1) The employer should have maintained a Provident Fund for the benefit of his employees; (2) There should have been a transfer of such fund or portion thereof to trustees; (3) Such transfer should have been in trust for the employees participating in the fund. It has not been shown that the view taken by the High Court that the transfer in the present case was not made to any trustees is unfounded. But we need express no opinion on the point because in our judgment the third condition could not be regarded as having been satisfied. The transfer was not made to trustees in trust for the employees participating in the fund. The common statutory fund created under the Provident Funds Act is meant not for the employees of the assessee only but it is meant for employees of hundreds of other employers who are covered by that Act. In other words the employees of the assessee alone did not participate in that fund. It is very doubtful whether the Provident Funds Act and the Scheme thereunder can be said to create a trust in the sense in which that word is used in section 58K (1) merely because the Board managing the Scheme was called the Board of Trustees. The members of the Board did not become trustees in the legal sense. They were appointed to administer the fund which vested in them only for the purpose of administration. It could well be said that the essential ingredient of a trust, namely, reposing of confidence by the author of the trust in the trustees for the purpose of carrying out his desires, wishes and directions and the acceptance of those obligations by the trustees was absent in the present case. It is, however, not necessary to examine in detail this aspect of the matter because as observed before the fund under the Provident Funds Act, was not restricted to the employees of the assessee only and it could never 4 73 be said that they alone participated in that fund. In such a situation section 58K could not be made applicable. Hardly any argument was addressed on the decision of the High Court on the second question. ' The expenditure was in curred in the relevant accounting year. It was something which had gone irretrievably. The amount in question had been spent and paid out in the relevant year of 'accounting, and was therefore allowable as expenditure incurred exclusively for the purpose of the business. It is not suggested that is was incurred for any other purpose. The conditions, of section 10(2) (xv) had been fully satisfied in the present case. In the result we concur in the answers given by the High Court. The appeal fails and is dismissed with costs. G.C. Appeal dismissed.

The assessee company respondent herein carried on the business of ,manufacture and sale of yarn and cloth. It started in 1914 a Provident Fund for the benefit of its monthly rated employees. Subsequently, another fund was started. These funds were not recognised under the pro visions of Chapter IXA of the Income tax Act, 1922. The employees and the company made contributions to the two funds from time to time. The Employees Provident Funds Act 19 of 1952 came into force on 31st October, 1952. Under directions given by the Provident Fund Commissioner the assessee company transferred to the statutory Employees Pro vidend Fund all the accumulations in the two private funds maintained by it including its own contributions thereto made upto October 31, 1952. The said contributions amounted to Rs. 3,01,772 1 7. In income tax proceedings for the assessment year 1957 58, the company claimed deduction of the above amount of Rs. 3,01,772 1 7 from its income. The Income tax Officer, the Appellate Assistant Commissioner as well as Income tax Appellate Tribunal disallowed the claim. In reference how ever the High Court decided in favour of the Company. The Commissioner of Income tax appealed to this Court. The questions that fell for considerations were : (i) whether the payment in question by the assessee company was capital expenditure within the meaning of section 58K(1) of Income tax Act and (ii) whether the said payment could be allowed as a deduction under section 10(2) (xv) of the Income tax Act? HELD : (i) For the application of sub section (1) of section 58K the following conditions must be satisfied : '(1) The employer should have maintained a Provident Fund for the benefit of his employees; (2) There should have been a transfer of such fund or operation thereof to trustees; (3) Such transfer should have been in trust for the employees participating in the fund. [472 C D] In the present case the third condition was not satisfied. The common statutory fund created under the Provident Funds Act was meant not for the employees of the assessee only but also for employees of hundreds of other employers who were covered by the Act. It was not restricted to the employees of the assessee and it could never be said that they alone participated in that fund. In such a situation section 58K was not applicable. [412 E; H 473 A] (ii)The expenditure was incurred in the relevant accounting year. It was something which had gone irretrievably. The amount in question had been spent and paid out in the year of accounting, and was, therefore, 469 allowable as expenditure incurred exclusively for the purpose of, the business. The conditions of section 10(2)(xv) had, therefore, been fully satisfied in the present case. [473 B C]

Civil Appeal No. 2035 of 1987. From the Judgment and order dated 23.4.1987 of the High Court of Punjab and Haryana in C.M.P. No 19 of 1987. S.N. Kacker and R.S. Sodhi for the Appellant. Mrs. Shyamla Pappu, A.M. Ashri, K.S. Thaper and V.K. Jain for the Respondents. 403 The Judgment of the Court was delivered by A SEN, J. The controversy in this appeal by special leave centres, s around the words 'in writing and signed by the parties ' added to order XXIII, r. 3 of the Code of Civil Procedure, 1908 by the Code of Civil Procedure (Amendment) Act, 1976 and the precise question is whether when a settlement is arrived at between the parties in appeal before the Court, the compromise cannot be given effect to under Order XXIII, r. 3 of the Code unless the terms of the compromise are embodied in an agreement in writing. First as to the facts. The respondent herein Chatur Bhuj Goel, a practising advocate at Chandigarh first lodged a criminal complaint against Colonel Sukhdev Singh, father of the appellant, under section 420 of the Indian Penal Code, 1860 after he had served the respondent with a notice dated July 11, 1979 forfeiting the amount of Rs.40,000 paid by him by way of earnest money, alleging that he was in breach of the contract dated June 4, 1979 entered into between Colonel Sukhdev Singh, acting as guardian of the appellant, then a minor, and the respondent, for the sale of a residential house at 1577, Sector 18D, Chandigarh for a consideration of Rs.2,85,000. In terms of the agreement, the respondent was to pay a further sum of Rs.1,35000() to the appellant 's father Colonel Sukhdev Singh by July 10, 1979 when the said agreement of sale was to be registered and vacant possession of the house delivered to him, and the balance amount of Rs. 1,10,000 on or before January 31, 1980 when the deed of conveyance was to be executed. The dispute between the parties was that according to Colonel Sukhdev Singh, there was failure on the part of the respondent to pay the amount of Rs.1,35,000 and get the agreement registered, while the respondent alleged that he had already purchased a bank draft in the name of the appellant for Rs.1,35,000 on July 7, 1979 but the appellant 's father did not turn up to receive the same. The respondent met him at his residence at Chandigarh on the morning of July 16, 1979 when it was agreed that they would meet in the District Court precincts later in the day for the purpose of registration of the agreement, but again the appellant 's father did not turn up. Although the learned Additional Chief Judicial Magistrate by order dated October 31, 1979 dismissed the complaint holding that the dispute was of a civil nature and no process could issue on the complaint, a learned Single Judge of the High Court by his order dated February 11, 1980 set aside the order of the learned Additional Chief Judicial Magistrate holding that the facts brought out clearly warranted an inference of dishonest intention on the part of Colonel Sukhdev Singh and accordingly directed 404 him to proceed with the trial according to law. Aggrieved, Colonel Sukhdev Singh came up in appeal to this Court by special leave. This Court by its order in Criminal Appeal No. 595/80 dated September 2, 1980 reversed the judgment of the High Court on the ground that the dispute was purely of a civil nature and the criminal 13 process could not have been employed for the purpose of coercing the appellant 's guardian Colonel Sukhdev Singh to specifically perform the contract. It was directed that Colonel Sukhdev Singh should return the earnest money of Rs.40,000 to the respondent on or before October 5, 1980 and in the meanwhile, the respondent was at liberty to file a suit for specific performance of the contract, if so advised. It was observed that the return of the said amount of Rs.40,000 by Colonel Sukhdev Singh would be without prejudice to the rights and contentions of the parties, including the right of the respondent to claim specific performance of the contract, if he was in law otherwise so entitled. Pursuant thereto, the appellant 's guardian Colonel Sukhdev Singh refunded the amount of Rs.40,000 to the respondent. On October 3, 1980 the respondent instituted the suit in the Court of the District Judge, Chandigarh, out of which this appeal arises, for specific performance of the contract and, in the alternative, claimed Rs.2,50,000 by way of damages. Both the learned District Judge as well as a learned Single Judge on a consideration of the evidence came to the conclusion that the breach of contract was on the part of the appellant 's guardian Colonel Sukhdev Singh and not on the part of the respondent and accordingly decreed the suit for specific performance. Thereupon, the appellant preferred an appeal under cl. 10 of the Letters Patent. The hearing of the Letters Patent Appeal commenced before a Division Bench on January 14, 1987 and continued for three days. On January 16, 1987, the appellant 's counsel had not concluded and there fore the hearing was adjourned to January 28, 1987. On that date, after the appellant 's counsel had addressed the Court for a while, the parties took time to explore the possibility of a settlement. At the resumed hearing later in the day, the appellant 's father Colonel Sukhdev Singh made a statement to the effect: "I make an offer that I shall personally pay Rs.2,25,000 to the respondent Chatur Bhuj Goel by way of full and final settlement of the dispute between him and the appellant. The said amount shall be paid by a bank draft in Court on 17.3.87. In the event of failure on my part to pay the 405 amount as stipulated on that date, the Letters Patent Appeal No. 734 of 1983 shall stand dismissed and the appellant shall have no right to file an appeal against the decision to the Supreme Court. " The above statement was duly endorsed by Shri V.K. Sharma, learned counsel appearing for the appellant and stated: B "The appellant makes an offer that in full and final settlement of the dispute between the parties, the appellant Gurpreet Singh in his personal capacity or through his father Colonel Sukhdev Singh shall pay Rs.2,25,000 to the respondent on 17.3.87 by a bank draft payable at Chandigarh, if the respondent agrees to the Letters Patent Appeal No. 734 of 1983 being allowed and that in the event of non payment of the amount on the stipulated date, the said appeal shall stand dismissed and the appellant shall have no right to file an appeal in the Supreme Court. " The respondent Chatur Bhuj Goel who, as already stated, is a practising advocate, was respondent by Shri Bhagirath Dass, a senior advocate practising at Chandigarh. Apparently, the respondent on mature deliberation made the following statement in the presence of his counsel "I accept the offer made by Colonel Sukhdev Singh and Shri V.K. Sharma, counsel for the appellant Gurpreet Singh. ' Thereupon, the learned Judges adjourned the appeal to March 17, 1987 i.e. the date on which the payment of Rs.2,25,000 was to be made. The aforesaid statements form part of the proceedings of the Court. Admittedly, the compromise was not reduced in writing and signed by the parties. Taking advantage of this fact, the respondent on February 9, 1987 made an application by which he tried to resile from the compromise stating: "on 28th January 1987, the offer of compromise was made by the appellant, which was recorded. The statement of the respondent was also recorded. The respondent however did not sign the statement. That the statement was made by the respondent without thinking of the repercussions of his statement. He was influenced by the stand, which was 406 adopted by his Senior Advocate Shri Bhagirath Dass. If the statement recorded by the Court which has not been signed by the respondent is given effect to, the respondent would suffer a tremendous loss. " On the adjourned date i.e. March 17, 1987, the learned Judges directed that in view of the fact that the respondent was not prepared to abide by the proposed compromise, the appeal would now be heard and decided on merits, with a further direction that it be placed before another Bench. Hence, this appeal by special leave. In support of the appeal Shri S.N. Kacker, learned counsel for the appellant, contends that the requirements of order XXIII, r. 3 of the Code are mandatory and the claim in the suit for specific performance having been settled by a lawful compromise within the meaning of r. 3, the learned Judges were not justified in directing that the appeal be placed before another bench for decision on merits. The learned counsel submits that order XXIII, r. 3 of the Code is in two parts. According to him, the words 'in writing and signed by the parties ' qualify the words 'any lawful agreement or compromise ' appearing in the first part and these words cannot obviously be read into the second part at all. It is urged that the first part of order XXIII, r. 3 of the Code refers to an adjustment on settlement of the claim in suit by a lawful agreement or compromise outside the Court, meaning thereby that where the parties make a statement before the Court that the dispute between them has been settled on certain terms and the statements so made form part of the proceedings of the Court, there is no legal requirement to have an agreement in writing embodying the terms of the compromise. For a proper appreciation of the contentions advanced, it is necessary to set out the Statement of objects and Reasons which is in these terms: "Cl. 77 Sub cl(iii). It is provided that an agreement or compromise under rule 3 should be in writing and signed by the parties. This is with a view to avoiding the setting up of oral agreements or compromises to delay the progress of the suit. The words 'lawful agreement or compromise ' in rule 3 have given rise to a conflict in the matter of interpreta 407 tion. One view is that agreements which are voidable under section 19A of the Contract Act are not excluded. While this stand is taken by the High Courts of Allahabad, Calcutta. Madras and Kerala, a contrary view has been expressed by the High Courts of Bombay and Nagpur. An Explanation has, therefore, been added to the rule to clarify the position. A proviso has been added to clarify that no adjournment should ordinarily be granted where a decision is necessary as to whether an adjustment or satisfaction has or has not been arrived at In view of the words 'so far as it relates to the suit ' in rule 3, a question arises whether decree which refers to the terms of a compromise in respect of matters beyond the scope of the suit is executable or whether the terms of the decree relating to the matters outside the suit can be enforced only by a separate suit. The amendment seeks to clarify the position. " The provision contained in order XXIII, r. 3 of the Code, as amended, provides: "Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, in writing and signed by the parties, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subject matter of the agreement, compromise or satisfaction is the same as the subject matter of the suit Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded thinks fit to grant such adjournment. Explanation. An agreement or compromise which is void or voidable under the (9 of 408 1872), shall not be deemed to be lawful within the meaning of this rule. " According to the grammatical construction, the word 'or ' makes the two conditions disjunctive. At first blush, the argument of the learned counsel appears to be plausible but that is of no avail. In our opinion, the present case clearly falls within the first part and not the second. We find no justification to confine the applicability of the first part of order XXIII, r. 3 of the Code to a compromise effected out of Court. Under the rule prior to the amendment, the agreement com promising the suit could be written or oral and necessarily the Court had to enquire whether or not such compromise had been effected. It was open to the Court to decide the matter by taking evidence in the usual way or upon affidavits. The whole object of the amendment by adding the words 'in writing and signed by the parties ' is to prevent false and frivolous pleas that a suit had been adjusted wholly or in part by any lawful agreement or compromise, with a view to protract or delay the proceedings in the suit. Under r. 3 as it now stands, when a claim in suit has been adjusted wholly or in part by any lawful agreement or compromise, the compromise must be in writing and signed by the parties and there must be a completed agreement between them. To constitute an adjustment, the agreement or compromise must itself be capable of being embodied in a decree. When the parties enter into a compromise during the hearing of a suit or appeal, there is no reason why the requirement that the compromise should be reduced in writing in the form of an instrument signed by the parties should be dispensed with. The Court must therefore insist upon the parties to reduce the terms into writing. In our considered opinion, the view to the contrary expressed by the High Court in Manohar Lal & Anr. vs Surjan Singh & Anr., [1983] Punj. LJ 402 that the first part relates to a lawful agreement or compromise arrived at by the parties out of Court, does not seem to be correct. Sandhawalia, CJ speaking for himself and Tewatia, J. observes that the word 'or ' makes the two parts disjunctive and they visualise two distinct and separate classes of compromise. According to the learned Judges, the first part relates to a lawful agreement or compromise arrived at by the parties out of Court, while the second is applicable where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit. Such a restricted construction is not warranted by the language used in r. 3. The word 409 'satisfies ' denotes satisfaction of the claim of the plaintiff wholly or in part, and for this there need not be an agreement in writing signed by the parties. It is open to the defendant to prove such satisfaction by the production of a receipt or payment through bank or otherwise. The satisfaction of the claim could also be established by tendering of evidence. It is for the Court to decide the question upon taking evidence or by affidavits as to whether there has in fact been such satisfaction of the claim and pass a decree in accordance with order XXIII, r. 3 of the Code. In any event, the present case clearly does not come within the ambit of the second part of order XXIII, r. 3 of the Code. Under the terms of the proposed compromise, the appellant was required to pay Rs.2,25,000 by a bank draft on March 17, 1987, but the fact remains that the respondent before the due date resiled from the proposed compromise saying that it was detrimental to his interest. That being so, the appellant could only fall back on the first part. But in the absence of an agreement in writing, the learned Judges had no other alternative but to direct that the appeal be listed for hearing on merits. In the result, the appeal must fail and is dismissed. The High Court is directed to hear and decide the appeal on merits. There shall be no order as to costs. N.P.V. Appeal dismissed.

% A suit filed by the respondent for the specific performance of a C contract entered into between him and the father of the appellant was decreed by the trial court. A Single Judge of the High Court affirmed the decree. During the hearing of the Letters Patent Appeal filed by the appellant, a settlement was arrived at between the parties, and statements were made by them to that effect before the court. The case was adjourned to the date on which payment in terms of the compromise was to be made. Though the statements formed part of the proceedings, the compromise was not reduced in writing and signed by parties. Taking advantage of this, the respondent tried to resile from the compromise. When the case came up on the adjourned date, the Division Bench directed that since the respondent was not prepared to abide by the proposed compromise, the appeal would be decided on merits and that the case should be placed before another Bench. ln the appeal by special leave against the aforesaid decision, it was contended on behalf of the appellant that the requirements of order XXIII Rule 3 Civil Procedure Code were mandatory, that the claim in the suit for specific performance having been settled by a lawful compromise within the meaning of Rule 3, the High Court was not justified in directing that the appeal be placed before another Bench for decision on merits, that the word "in writing and signed by the parties" qualified the words "any lawful agreement or compromise" appearing in the first part and, therefore, where the parties made a statement before the Court that the dispute between them had been settled on certain terms, and the settlement so made formed part of the proceedings of the Court, there was no legal requirement to have an agreement in writing embodying the terms of the compromise. 402 Dismissing the appeal, ^ HELD: The whole object of the amendment of Rule 3 of the Civil Procedure Code, 1908 by adding the words "in writing and signed by the parties" is to prevent false and frivolous pleas that a suit has been adjusted wholly or in part by any lawful agreement or compromise, with a view to protract or delay the proceedings in the suit.[408C D] Under Rule 3 as it now stands when a claim in suit has been adjusted wholly or in part by any lawful agreement or compromise, the compromise must be in writing and signed by the parties and there must be a completed agreement between them. To constitute an adjustment, the agreement or compromise must itself be capable of being embodied in a decree. When the parties enter into a compromise during the hearing of a suit or appeal, there is no reason why the requirement that the compromise should be reduced in writing in the from of the an instrument signed by the parties to reduce the terms into writing. [408D F] The present case clearly does not come within the ambit of the second part of Order XXIII Rule 3 of the Code. Under the terms of the proposed compromise, the appellant was required to pay Rs.2,25,000 by a bank draft on March 17, 1987 but before the due date the respondent resiled form the promised compromise, saying that it was detrimental to his interest. That being so, that appellant could only fall back on the first part. But, in the absence of an agreement in writing, the High Court had no other alternative but to direct that the appeal be listed for hearing on merits. [409C D] Manohar Lal & Anr. vs Surjan Singh & Anr., [1983] Punj. Lj 402, overruled.